Bill C-26
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RECOMMENDATION |
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Her Excellency the Governor General recommends to the House of
Commons the appropriation of public revenue under the circumstances,
in the manner and for the purposes set out in a measure entitled ``An Act
to amend the Customs Act, the Customs Tariff, the Excise Act, the Excise
Tax Act and the Income Tax Act in respect of tobacco''.
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SUMMARY |
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This enactment implements tobacco tax measures announced by the
Minister of Finance on April 5, 2001 as part of the government's
initiative to reduce tobacco consumption in Canada, especially among
youth. It also implements a measure proposed in Budget 2000 reducing
the exemption threshold under the tax on exports of tobacco products
before April 6, 2001.
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The amendments to the Customs Act, the Customs Tariff, the Excise
Act, the Excise Tax Act and the Income Tax Act announced on April 5,
2001 implement new tax measures with respect to domestic tobacco tax
rates, exports of tobacco products, tobacco products sold in duty free
shops or as ships' stores, and tobacco products imported by resident
travellers, as well as changes to the surtax on tobacco manufacturing
profits.
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Tobacco Excise Tax Rate Increases. The amendments increase
excise tax rates by $2.00 per carton on cigarettes for sale in Ontario and
Quebec, $1.35 per carton in Prince Edward Island, 30 cents per carton
in New Brunswick and 10 cents per carton in Nova Scotia. The
amendments increase excise taxes on tobacco sticks by $1.00 per 200
sticks nation-wide, and on manufactured tobacco other than cigarettes
and tobacco sticks by $2.80 per 200 grams on products for sale in
Ontario and by $1.00 per 200 grams on products for sale in other
provinces and the territories. These tax increases are effective April 6,
2001.
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Tax on Exports of Tobacco Products. This enactment implements
the Budget 2000 proposal to reduce the exemption threshold under the
tax on exports of tobacco products before April 6, 2001 from 2.5% to
1.5% of a manufacturer's production of tobacco products in the
previous calendar year.
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The amendments also implement the April 5, 2001 proposal to
impose a new two-tiered tax on exports of tobacco products. For exports
up to 1.5% of a manufacturer's production in the preceding calendar
year, a new excise tax is imposed at a rate of $10 per carton for
cigarettes, $7 per 200 sticks for tobacco sticks, and $6 per 200 grams for
manufactured tobacco other than cigarettes and tobacco sticks. The
amendments authorize the Minister of National Revenue to refund this
tax where the importer provides evidence satisfactory to the Minister
that all taxes and duties imposed at the national level under the laws of
the foreign country into which the tobacco products are imported have
been paid.
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For exports over 1.5% of a manufacturer's production in the
preceding calendar year, the amendments impose the current excise
duty on tobacco products plus a new excise tax. The sum of the excise
duty and excise tax is $22 per carton for cigarettes, $16 per 200 sticks
for tobacco sticks, and $12 per 200 grams for manufactured tobacco
other than cigarettes and tobacco sticks.
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The amendments related to the new two-tiered export tax are
effective April 6, 2001.
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Tax on Tobacco Products for Sale in Duty Free Shops. The
amendments impose excise duty and a new excise tax on
Canadian-manufactured tobacco products delivered to duty free shops
in Canada, or exported for delivery to foreign duty free shops, payable
by the domestic manufacturer. The sum of excise duty and excise tax is
$10 per carton for cigarettes, $7 per 200 sticks for tobacco sticks, and
$6 per 200 grams for manufactured tobacco other than cigarettes and
tobacco sticks. The amendments also impose an equivalent excise tax
on imported tobacco products delivered to a duty free shop in Canada,
payable by the operator of the duty free shop. The tax on imported
tobacco products will be refunded on the first carton or equivalent of
each product category sold to an individual who is not a resident of
Canada and who exports the product. These measures are effective
April 6, 2001.
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Tax on Tobacco Products Delivered as Ships' Stores. The
amendments impose excise duty and a new excise tax on
Canadian-manufactured tobacco products delivered as ships' stores in
Canada, or exported for delivery as foreign ships' stores, payable by the
domestic manufacturer. The sum of excise duty and tax is $10 per carton
for cigarettes, $7 per 200 sticks for tobacco sticks, and $6 per 200 grams
for manufactured tobacco other than cigarettes and tobacco sticks.
These measures are effective April 6, 2001.
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Duty on Traveller's Tobacco Products. The amendments impose
a new duty under the Customs Tariff on manufactured tobacco products
imported by a resident of Canada under the terms of the traveller's
allowance. The new duty is imposed at a rate of $10 per carton for
cigarettes, $7 per 200 sticks for tobacco sticks, and $6 per 200 grams for
manufactured tobacco other than cigarettes and tobacco sticks. This
duty will not be imposed on tobacco products imported by an individual
for personal use that are stamped in accordance with the Excise Act and
on which excise duty has been imposed under that Act. These
amendments are effective October 1, 2001.
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Tobacco Manufacturers' Surtax. The amendment increases the
rate of the existing surtax imposed under the Income Tax Act on a
corporation's tax on profits from tobacco manufacturing. The rate
increase is from 40% to 50% for taxation years ending after April 5,
2001, and is prorated for any taxation year straddling that date.
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Miscellaneous Amendments. This enactment also implements a
number of related and consequential measures, including provisions
related to the application of interest in respect of taxes or duties
amended or implemented by this enactment, new restrictions on the
entry of tobacco products into bonding warehouses, and on their
subsequent removal, and new stamping requirements and new offence
and penalty provisions.
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