Yes, that's true. The manufacturer of cigarettes on the Canadian side of the reserves, or any reserves within Canada, should carry a federal excise. Federal excise should be applied to that.
Clearly that is not happening when you talk about $6. The federal tax alone, to say nothing of the provincial tobacco tax and so on, which would apply outside the reserve, is way in excess of $6. So there is an issue of enforcement of the laws with the Excise Act. But our understanding is that any manufacturing operation, provided it complies with the federal regulations and laws within the reserves on the Canadian side, should do so; however, the criminal activity is when those cigarettes are sold to non-status Indians or taken off the reserves for resale to others. That's where criminality gets involved.
I think the RCMP can speak better about the nature of the criminal networks that are operating off the reserves, but that is where the key illegality happens. There are other laws that should be respected concerning the manufacture: for example, health warnings, the use of low-ignition propensity cigarette paper, which is also covered under Canadian laws and regulations. All of those should be respected. But I totally agree with you, there is a need. If there is to be any additional tax over and above the federal excise, there does need to be agreement on the enforcement of both the federal excise as well as the first nations tax.
I can't see who would lose out from the introduction of a measure such as this. You'd be reducing the amount of illegal trade, you'd be reducing the revenue losses for federal and provincial governments, and on top of that, you'd be generating useful funds for the much-needed development programs on the first nations reserves.