Contraband Tobacco: Ontario, Qu

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• Michael Perley, Director
• Ontario Campaign for Action on Tobacco

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CONTRABAND TOBACCO Ontario, Québec And Federal
Enforcement Tools And Responsibilities

• A Taxing Issue Public Health and Contraband
  Tobacco
• University of Buffalo Center for Tomorrow
• February 4-5, 2009

Michael Perley Director Ontario Campaign for
Action on Tobacco
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Canada Federal Government

• Canada Revenue Agency (CRA)
• Issues licenses for cigarette manufacturing and
  conducts inspections of growers, manufacturers
  and retail outlets
• Revenue Minister has authority under Excise Act
  2001 (URL http//laws.justice.gc.ca/en/ShowFullD
  oc/cs/e-14.1///en) to revoke manufacturing and
  license if access to manufacturing facilities is
  refused
• Excise Act also prohibits possession or
  importation of tobacco manufacturing equipment by
  unlicensed manufacturers (parallel measure in
  Ontario legislation)

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Canada Federal Govt. (2)

• Royal Canadian Mounted Police (RCMP)
• Key legislation Excise Act prohibits unlicensed
  manufacturing AND the possession, transportation,
  or sale of unstamped cigarettes that is, excise
  duty not paid.
• Focus on large-scale illegal manufacturing and
  distribution involving organized crime
• Cooperation with Akwesasne Mohawk Police, border
  security officials
• No on-reserve action against unlicensed
  manufacturers
• Release of contraband tobacco enforcement
  strategy in May/08 (URL http//www.rcmp-grc.gc.ca
  /ce-da/tobacco-tabac-strat-2008-eng.htm)

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Canada Federal Govt. (3)

• Other
• Interdepartmental Task Force created to look for
  further enforcement options 20 million in
  additional enforcement funding announced in
  July/08.
• Improved tax marking system to be introduced in
  2010 with additional covert security features to
  combat counterfeit tobacco products.

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Québec

• 2004 Tobacco Tax Act (URL http//www.canlii.org/
  qc/laws/sta/i-2/20080818/whole.html) amended to
  control importation, transportation, storage and
  sale of raw tobacco power to seize shipments of
  raw tobacco to unlicensed manufacturers created
  (applied to tobacco leaves that have not been
  processed beyond the drying stage and fragments
  of such tobacco leaves)
• 2006 Tobacco Tax Act amended to ban possession
  and sale of counterfeit tobacco and to
  substantially increase fines for
  contraband-related crimes.

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Québec (2)

• 2008
• Tobacco Tax Act amended to make provision
• of services to an unlicensed party by a licensed
  
• manufacturer illegal
• Québec budget requires manufacturers making
• cigarettes under contract for someone else
• and the other party to both have manufacturers
• permits
• Purchasing or taking delivery of tobacco via a
• party without a license is prohibited
  (complements
• prohibition on supply of raw tobacco)

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Québec (3)

• 2008 (contd)
• Importers of raw tobacco required to keep
  registers and file reports.
• May 2008 Québec Health Department and Laval
  police departments launch Operation VITAL to
  counter illegal tobacco trade in Laval first
  instance of joint program between health and
  police ministries/departments in Canada.

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Ontario

• Key legislation Tobacco Tax Act
  (http//www.e-laws.gov.on.ca/html/statutes/english
  /elaws_statutes_90t10_e.htm) creates the
  authority to seize contraband, assess penalties
  for possession of unmarked product, and unpaid
  taxes (3-8 times unpaid tax depending on
  offence). Fines start at 500 and can reach
  50,000 per offence.
• Applies to all tobacco products including chewing
  tobacco.
• Retailers required to provide invoices to prove
  products purchased have had taxes collected.
• Authority to seize product such as baggies with
  no health warnings.

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Ontario (2)

• Special Investigations Branch conducts
  investigations in collaboration with other
  enforcement agencies.
• Applies to retailers and wholesalers, importers
  and exporters.
• Prohibits supply of tobacco manufacturing
  machinery to unlicensed persons (parallel with
  federal legislation)
• Manufacturing, wholesaling and retailing permits
  and certificates may be cancelled if a person
  designated under the Act fails to comply with its
  conditions.

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Ontario (3)

• All persons who produce, purchase, sell, or stamp
  cigarettes must provide security equal to the
  greater of three months tax that would be
  collectable or up to 1 million, whichever is
  greater.
• Retail sales prohibition can last up to six
  months.
• Authorized persons with reasonable/probable
  grounds may stop any vehicle, examine it and
  seize more than 200 unmarked cigarettes.
  Penalties can reach 3 times tax due plus up to
  5,000 in fines.
• No one can possess unmarked/untaxed cigarettes,
  more than 50 unmarked/untaxed cigars or more than
  1 kg of other tobacco.

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Ontario Provincial Police

• If authority is obtained from RCMP or Ontario
  Ministry of Revenue to search vehicle and/or
  seize product, OPP can seize contraband under the
  federal Excise Act (Policy 50 cartons/bags
  only), and possibly lay charges under the Ontario
  Tobacco Tax Act.
• Could then turn product over to Ontario Ministry
  of Revenue for civil penalty or charges

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Ontario Municipal Police

• Same as OPP but authority usually obtained from
  Revenue Ministry policy also for quantities of
  50 cartons only.

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Ontario Public Health Inspectors and Tobacco
Enforcement Officers

• No authority now available to search for/seize
  contraband.

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Wednesday-Thursday February 4-5, 2009 Center for
Tomorrow University at Buffalo Buffalo, New York