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Bill C-32

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Royal Assent

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	SUMMARY
	These amendments to the Excise Tax Act, the Excise Act and the Income Tax Act implement a number of key measures included in the federal action plan on tobacco smuggling. The amendments to the Excise Tax Act also implement the changes to the air transportation tax and the goods and services tax that were announced in the February 22, 1994 budget.
	The measures that are part of the action plan on tobacco smuggling are:
	- a reduction in the excise tax on tobacco products;
	- a further reduction in the excise tax on tobacco products sold in those provinces (Ontario, Quebec, Nova Scotia, New Brunswick and Prince Edward Island) that have reduced their tobacco taxes;
	- the imposition of an excise tax on exported tobacco products;
	- new excise tax and offence provisions that apply where tobacco products taxed at a reduced federal excise tax rate in one province are diverted to another province;
	- measures to ensure that unmarked tobacco products sold to Indians on reserves in Ontario and Nova Scotia are taxed at the same reduced federal excise tax rates as marked tobacco products sold to other consumers in those provinces;
	- provisions for rebates of excise tax paid on tobacco products held in inventories when federal excise tax rates were reduced;
	- an adjustment to the fines applicable for illegal possession or sale of unstamped tobacco products; and
	- the imposition of a surtax on tobacco manufacturing profits.
	The amendments to the air transportation tax reduce the tax burden on short-haul domestic and transborder flights and shift the tax burden to long-haul flights.
	The amendment to the goods and services tax reduces the percentage of GST paid on business meals and entertainment that may be effectively recovered as an input tax credit from 80% to 50%.