Yes. My apologies, Mr. Chairman. Maybe I misunderstood because the rules change daily here. What used to be rules yesterday are not rules today. Let me first of all respond to my colleague with respect to taxation particularly, what commonly are known as the sin taxes which are on cigarettes and alcohol.
We have, I am told by my very competent staff, the highest tobacco taxes in the country. We generate somewhere in the region of about $17 million on an annual basis on tobacco taxes. The danger of increasing the tobacco tax any higher than what they currently are, would be a real tendency, we believe and other jurisdictions have found out, for smuggling. It would be highly lucrative. In fact there was, if you recall, some charges laid, I believe in the Iqaluit area, where there was some smuggling which took place. I would be reticent on the sin tax to add any additional dollars.
Just for clarity purposes, if we increased the tobacco taxes five percent, it would bring us about $750,000. There is a serious concern out there with respect to smuggling. As I said and Mr. Setchell points out, our taxation is the highest, repeat the highest, in the country. In some cases it is six times what some other provincial jurisdictions are. The temptation for smuggling would be immense. I would not want to put this government and the territories in that position.
On liquor revenues, again, I am advised our net profit is about $16 million. All liquor net revenues go into general revenues and, of course, they are reallocated through the envelopes and we have debated this before. We do not designate the liquor revenues for this. We designate some into general revenues. Based on the overall general revenues, we allocate to envelopes like the social envelope, who looks after alcohol related issues my colleague, Mr. Krutko, spoke to. I think we all recognize the impact that has both on the criminal judicial side and on the wear and pain it inflicts upon the people we represent and the families across the territories.
On the other taxation, with respect to corporate taxes, I am fundamentally of the belief that at this time it would not be appropriate. We are trying to find creative ways to provide incentives for corporations to reinvest their money. It would be fair to say with the current climate of downsizing the government and of the price of gold and some of the impacts that has had, not only in this town, but in other parts of the territories, I am a fundamental believer in incentive approach to development, not punitive. I would have some reticence at this time to even suggest we even be taxing the corporations. There may be a case for diamonds. I think I have said that publicly because of the degree of profitability and the wealth it is going to bring to its stakeholders, its investors and hopefully this country. We are investigating that. We are looking at the options there. It would be important that I say that out loud today. Overall, I think we would like to keep the corporate tax where it is. It is relatively competitive, I believe, sitting around second or third in the country, I am not sure. Third lowest in the country. I am sort of reasonably comfortable with that.
I am well aware of the dilemma of development like what took place in the Beaufort area and some of the havoc it created when it collapsed. I have seen it myself in the 70s when I was up in that area. We have to guard against that. There is no question about it and the huge expectation that both the business and local community had. We need to find the ways and means to guard against that and the current multi-million dollar ventures that are currently underway in the country whether it is in diamonds or whether it is in a fair amount of oil and gas exploration in the Sahtu Fort Liard area. I am encouraged by that. It is a good sign and I think the community seemed to be very active in that area with industry. I do not know if I answered all the questions, the important ones anyway that relate to the revenue side, at this time. Mr. Chairman. An increase in taxes is not the practical and the philosophical way to go, whether it is in the sin taxes which would encourage smuggling or whether it is in the corporate taxes which would be a disincentive for additional equity investment in the country. It is kind of contrary to some of the things we have put forward in the budget, particularly in the tax credit investment initiative. I hope I have answered the questions my colleague asked.
What else did he ask? The P3. I have talked extensively about that issue. I am glad to see my colleague is supportive of it. I do appreciate that support. It is a new venture for this government even though it has been done in other parts of the country. I have said consistently we have to make sure it is transparent. We have to make sure the communities and aboriginal organizations get active in this initiative. It has to be affordable.
This sort of gives me an opportunity to express a personal concern I have with respect to the public perception on P3. There is a growing feeling out there it is going to solve all of our problems. I want to caution everybody. I see the P3 as just one small part of trying to bring some of the infrastructure needs of the Arctic communities back to where it originally was two years ago. It is not a be-all, end-all. It is not some big panacea where we are going to go out and spend hundreds and hundreds of millions of dollars. There is an affordability issue. There is going to be a fairly stringent criteria for selection, let me repeat that, of projects. There has to be payback somewhere, whether it is in the savings to the government, whether it is in the creation of new job and economic opportunities. I would like to caution as it gives me an opportunity to caution everybody that when we look at the Public/Private Partnerships, you have to look at them with a certain conservative approach to it. I guess, that is the best way to put it. I think that is it. I am not sure. Okay. Thank you.