Bill S-16 (Historical)

Tackling Contraband Tobacco Act

An Act to amend the Criminal Code (trafficking in contraband tobacco)

This enactment amends the Criminal Code to create a new offence of trafficking in contraband tobacco and to provide for minimum penalties of imprisonment for repeat offenders.

Second reading

[Patrick Brown, Conservative, Barrie, ON]

Mr. Speaker, I am sharing my time with the very hard-working member for Wetaskiwin.

I am pleased to say a few words about Bill S-16, An Act to amend the Criminal Code (trafficking in contraband tobacco)

This bill contains a number of very important amendments to the Criminal Code aimed directly at the criminals who are flooding Canada with illicit tobacco products that undermine the Canadian economy, fuel addiction, and add to the already serious long-term health issues associated with smoking.

As we have heard, this is not the first time that Canada has faced the challenge of contraband tobacco. When the problem first arose some two decades ago, it had to do with our own legally manufactured and exported tobacco products being smuggled back into our domestic market at greatly reduced prices. Through a combination of tax policy and enforcement measures, we were able to stem the tide of this early onslaught of contraband tobacco.

Since then, the primary legislative vehicle for controlling this illegal trade has been the Excise Act. This legislation combines fines, jail terms and forfeitures to enforce the prohibition against selling tobacco products that have not been stamped. Stamping indicates that the excise tax has been paid. Unfortunately, despite this legislation and despite the efforts of dedicated law enforcement officials, contraband tobacco remains a serious threat to the public safety of Canadians, their communities and the Canadian economy.

Although there are several sources for the contraband tobacco products that are entering Canada, the illicit trade is driven largely by illegal operations run by criminal organizations in both Canada and the United States. In this regard, the provinces of Ontario and Quebec have the highest concentration of illegal manufacturing operations, the majority of the high-volume smuggling points and the largest number of consumers of contraband tobacco.

In response, the government launched the RCMP contraband tobacco enforcement strategy in 2008 with a focus on reducing the availability and demand for contraband tobacco and on weakening the involvement of organized crime in this illegal industry. At the same time, the task force on illicit tobacco products was formed to identify concrete measures to disrupt or reduce the trade in contraband tobacco. The next year, the task force presented a lengthy report to the Minister of Public Safety in which it noted that at least 30% of Canadian tobacco purchases involved contraband tobacco.

One of the primary drivers of this illicit trade, aside from the willingness of consumers to pay markedly reduced prices, has been the shift from single individuals or small groups conducting sporadic smuggling to organized crime groups doing the smuggling and distributing the illicit tobacco through their criminal networks.

Clearly, the time has come to take steps to come to grips with the growing nature of this illegal activity and the growing involvement of criminal organizations whose related activities include the smuggling of other items into Canada using the same networks, which is particularly alarming.

This is the context in which we must evaluate Bill S-16.

Briefly, the bill is one part of a two-part response to the issue I have described. The first part is the bill itself. It proposes to amend the Criminal Code to create a new hybrid offence of trafficking in contraband tobacco, with mandatory minimum penalties for repeat offenders. The second part of the response is the implementation of a strengthened anti-contraband enforcement strategy that includes the establishment of an anti-contraband force made up of 50 RCMP officers. Both of these proposals respond to the 2011 election platform commitments of this government.

I will go into a bit more detail on exactly what is contained in Bill S-16.

First, the bill would create a new offence in the Criminal Code to deal with contraband tobacco trafficking. Indeed, the bill would prohibit the possession for the purpose of sale, offer for sale, or the transportation, delivery or distribution of a tobacco product, or raw leaf tobacco that is not packaged unless it is stamped. The terms “tobacco product”, “raw leaf tobacco”, “package” and “stamped” have the same meaning as in section 2 of the Excise Act, 2001. This would ensure consistency in our national enforcement efforts.

Pursuant to these proposed amendments, the maximum penalty for a first offence would be up to six months' imprisonment on a summary conviction and up to five years' imprisonment if prosecuted on an indictment.

Repeat offenders, convicted of this new offence in cases involving 10,000 cigarettes or more, 10 kilograms or more of any other tobacco product or 10 kilograms or more of any raw leaf tobacco would be sentenced to a mandatory minimum term of imprisonment of 90 days on a second conviction, a mandatory minimum of 180 days on a third conviction and a mandatory minimum of 2 years less a day on subsequent convictions.

The amendments proposed in the, appropriately titled, tackling contraband tobacco act would not only respond to our domestic problems but would equally respond to the broader international efforts to combat trafficking in tobacco. Let us recall in this context that tobacco smuggling by definition means the illegal movement of goods over national frontiers. Tobacco smuggling is a particularly widespread illegal activity and has an impact on a great number of countries. Thus, Canada is not alone in wanting to put an end to this illicit commerce.

In any attempt to combat organized crime's involvement in tobacco smuggling, one must recognize that organized crime adopts all forms of corruption to infiltrate political, economic and social levels all over the world. This issue has been addressed at both global and regional levels and continues to receive substantial domestic and international attention.

The international community has adopted many international instruments dealing with criminal law. These international agreements attest to a country's recognition of the need for international co-operation to tackle international crime. One aspect of international co-operation that is repeatedly found in these instruments deals with mutual legal assistance. This form of international co-operation is one of the most powerful tools employed by governments to reduce the incidence of international crime.

Therefore, not only does tobacco smuggling necessarily contain an international dimension, one that sometimes involves several countries and the crossing of several borders; it also involves, as our own law enforcement representatives have informed us, significant organized crime group participation. Bill S-16 would not exist in isolation. While this new legislation would help Canada combat tobacco smuggling, it would also help us combat tobacco smuggling and organized crime outside our own borders, not just in Canada alone.

In closing, I thank hon. members for their attention and urge them to consider the broad context in which Bill S-16 must be assessed. Once they have done that, I am convinced they will agree with me that this bill ought to be passed and implemented without delay.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, in the context of contraband tobacco, forgive me, but every time someone mentions organized crime I tend to think of the tobacco industry as organized crime, having lost my grandfather to lung cancer at a time when cigarette companies advertised tobacco as safe and recommended by doctors despite the U.S. surgeon general's warning.

However, in this case, we know we are fighting contraband tobacco, and the bill would be helpful. However, I am concerned about some aspects of it, and I wonder whether the hon. member thinks there will be room for amendments in committee.

[Patrick Brown, Conservative, Barrie, ON]

Mr. Speaker, I am not on the committee dealing with this bill, but I know these bills get looked at very seriously in committee.

I would agree with the hon. member on her concern about the importance of combating the dangers associated with tobacco. That is why, with the five-year renewal of the federal tobacco strategy in 2012, Health Canada will continue its very dedicated work on tobacco control initiatives that are aimed to preserve the gains we have made in the last 10 years, which are quite significant.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Mr. Speaker, I am glad to rise in my place today and speak to this legislation. I would like to thank my colleague the member of Parliament for Barrie for sharing his time with me, for his excellent speech and for his support of the bill.

I rise to speak in favour of Bill S-16, An Act to amend the Criminal Code (trafficking in contraband tobacco). This enactment proposes amendments to the Criminal Code to create new offences for trafficking in contraband tobacco and to provide minimum penalties of imprisonment for persons who are convicted of a second or a subsequent time for this offence.

This legislation would prohibit possession for the purpose of sale or offer to sale, the transportation of or the delivery or distribution of a tobacco product or raw leaf tobacco that is not packaged, unless it is officially stamped. The terms “tobacco product”, “raw leaf tobacco”, “packaged” and “stamped” have the same meanings as in section 2 of the Excise Act, 2001.

The maximum penalty for a first offence would be up to six months' imprisonment on summary conviction and up to five years' imprisonment if prosecuted by way of indictment. Repeat offenders convicted of this new offence in cases involving 10,000 cigarettes or more, 10 kilograms or more of any other tobacco product, or 10 kilograms or more of raw leaf tobacco would be sentenced to a minimum of 90 days on second conviction, a minimum of 180 days on a third conviction and a minimum of two years less a day on all subsequent convictions.

Overall, the proposals represent a tailored approach to the imposition of mandatory minimum penalties for serious contraband tobacco activities. The bill proposes mandatory minimum penalties only in cases where there are certain aggravating factors present.

Trafficking in contraband tobacco is a serious problem that requires serious remedies. As some members will recall, a contraband tobacco market became a significant issue in Canada in the late 1980s. During that period, more and more legally manufactured Canadian cigarettes destined for the duty-free market began making their way back into the Canadian underground economy. The high retail price of legitimate cigarettes made the smuggling of cigarettes across the border a striving and lucrative illicit business.

The Royal Canadian Mounted Police and Canadian customs seized large quantities of contraband tobacco. The RCMP was also engaged in investigating this illegal activity at its source. These investigations eventually led to several tobacco companies having to pay more than $1.5 billion in criminal fines and civil restitution.

While this type of smuggling activity largely has subsided, the illicit tobacco market in Canada has rebounded in recent years, involving contraband tobacco that is primarily connected not to the diversion of legally manufactured products but to the illegal manufacture, distribution and selling of contraband tobacco products. It also includes to a lesser degree the illegal importation of counterfeit cigarettes and other forms of illicit tobacco from abroad.

Organized crime groups play a central role in the contraband tobacco trade in Canada, and this means that this illegal activity is linked with other kinds of crime. Most of the organized crime gangs that are involved in the illicit tobacco market are also active in other forms of criminal behaviour.

The problem is further complicated and exacerbated by the fact that some of the illegal manufacturers that supply the Canadian market are on the U.S. side of the Akwesasne Mohawk territory, which spans the border between Quebec, Ontario and New York state.

Members should know that transnational crime of the type found in contraband tobacco smuggling is considered a threat to public safety and national security and has a direct impact on individual Canadian businesses and our economy. It also has implications for relationships with our international partners, especially the United States. In this regard, however, Canada and the U.S. share a long history of law enforcement co-operation across our shared border.

Contraband tobacco is driven largely by illegal operations on both sides of the border. The provinces of Ontario and Quebec have the highest concentration of contraband tobacco manufacturing operations, the majority of high volume smuggling points and the largest number of consumers of contraband tobacco.

Criminal organizations are motivated by the lure of significant profits and relatively low risks in this sphere of illegal activity. Enforcement actions are, therefore, directed at increasing the risks associated with contraband tobacco activities: dismantling illegal manufacturing facilities, disrupting distribution supply lines, apprehending key figures and individuals, confiscating conveyances such as trucks and boats, and seizing the proceeds of crime. These actions have the dual goals of disrupting the illicit flow of tobacco and weakening the organized crime groups involved in the production, distribution, smuggling and trafficking of contraband tobacco.

To achieve these goals, the RCMP has engaged in joint targeted initiatives with law enforcement partners and other stakeholders across Canada and even, as mentioned earlier, internationally. These initiatives, varying in their degree of complexity, include short- and long-term joint investigations, outreach and awareness campaigns and active participation in inter-agency contraband tobacco task forces and groups. Unfortunately, contraband tobacco remains a serious threat to our communities, and if left unchecked, organized crime will continue to profit at the expense of the health and safety of Canadians.

Recent intelligence indicates a rise in counterfeit tobacco products entering the Canadian market. These illegal products are then transported through nationwide networks for sale to consumers as a cheaper alternative to legitimate tobacco products, thereby making them more accessible to Canadian youth.

Protecting society from criminals is a responsibility our government takes very seriously. Overall, the proposals represent a tailored approach to the imposition of mandatory minimum penalties for serious contraband tobacco activities. This bill proposes minimum penalties only in cases where there are certain aggravating factors present.

This bill is part of the government's continued commitment to take steps to protect Canadians and to make our streets and communities safer. Canadians want a justice system that has clear and strong laws that denounce and deter serious crimes, including illicit activities involving contraband tobacco. They want laws that impose penalties that adequately reflect the serious nature of these crimes, and this bill would achieve that.

I encourage all of my colleagues and members on each side of the House to fully support Bill C-16. It is high time we made this the law of the land.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Mr. Speaker, I would like to thank my colleague for his speech, and I commend him for it. As was already mentioned, the NDP will support this bill at second reading.

I am still wondering about how effective the bill will be and what impact it will have on the tax evasion associated with contraband cigarettes in Canada, which deprives the government of over $2 billion in tax revenue a year.

I would like my colleague to share his thoughts on that.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Mr. Speaker, I appreciate the question that is being asked. In my riding, there are a lot of great folks who live on first nations territory. Some time ago, a seizure was made at one of the bands, where 14 million contraband cigarettes were seized on that reserve. This particular group of reserves is quite notorious across Canada, sometimes for good reasons but also sometimes for bad reasons, with its links to organized crime. The Alberta government stepped in and confiscated this illegal tobacco due to the fact that it did not have a provincial stamp, which resulted in a loss of revenue in just that shipment alone of several million dollars of taxes that should have been collected.

This is a very serious issue. We cannot have a situation where there are two different streams, one of contraband and one of a legal flow of goods and services in this country. Not only is the contraband not a healthy choice and not inspected by the appropriate authorities, but it evades the taxes that are duly imposed upon these goods in order to address the serious issues that we have as a nation.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Mr. Speaker, the member addressed some of the issues relating to contraband tobacco—the criminal element, the tax evasion element and the negative health aspect—but the one aspect that I am sure my colleague is even more familiar with than most of us in the House, because of his former occupation in the education field, is the impact on youth. Many of us have witnessed the addictive qualities of tobacco. The earlier youth are introduced to tobacco, the greater the likelihood they will not be able to get rid of this addiction later in life. Research clearly shows that the large majority of tobacco that is smoked on college and high school campuses is of a contraband nature.

I am wondering if my colleague could comment on how serious it is that we take action on this now.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Mr. Speaker, the Government of Canada and the Minister of Health and others have taken several measures on this side of the House, in particular, to deal with these issues. For example, when it came to clarifying the tobacco laws on adding flavours or other types of things that would be an enhancement or an inducement to young people, or making the packaging look like gum or candy cigarettes, these were dealt with on this side of the House.

We have had active education campaigns to ensure that Canadians understand the risks to health and the dangers from smoking. These are some of the initiatives we have done. We have also changed the labelling on cigarette packaging to clearly indicate the health concerns, making it less attractive for Canadians, especially young Canadians, to go down the road of even starting smoking.

[Jack Harris, NDP, St. John's East, NL]

Mr. Speaker, I am opposed to tobacco addiction as much as anybody else, and I appreciate the member's comments.

However, are we into the new normal here now? The Senate passes legislation. It has the whole process, then it comes here. We have one hour of debate, and then closure is called. We are the rubber stamp for the other place. Is that the new normal the government is taking on?

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Mr. Speaker, the fact that the member stood and asked me a question in the House is a clear indication that the member has an opportunity to voice his opinion on the bill.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Mr. Speaker, I would first like to indicate that I will be sharing my time with the excellent member for Churchill, who is a great MP, by the way.

At first glance, this bill, which seeks to amend the Criminal Code and tackle contraband tobacco, appears to be a small bill that amends a provision of the Criminal Code. However, rather than addressing the real problem and focusing on prevention, the bill once again amends the Criminal Code in order to make the justice system stronger. This is a very noble cause or objective. However, the problem is that every time the government wants to address a problem, rather than allocating more financial, material and human resources to the organizations that are actually doing the work in order to address the real problem, it amends one or two sections of the Criminal Code and leads people to believe that these measures will solve all of the problems and that everything will be fine as a result.

I do not believe that solving the problem of contraband tobacco is that easy. We are talking about first nations, but contraband tobacco is a problem all across the country. Illegal cigarettes are flooding the market, and our young people are being shamelessly targeted by false Internet advertising. Why do we not pass similar legislation to deal with these ads?

It is so easy to go online and order illegal cigarettes, which come from all over the world and are often made by children who work in atrocious conditions. The cigarettes end up on the market. What impact will this have on the health of our young people?

Most of the provinces have extremely effective programs to combat smoking among young people. The federal government is trying, once again, to follow suit by investing in prevention. Prevention should take place at schools and in the schoolyards, but it also requires leadership. Our leaders need to take charge of the situation and send a clear message to the public that tobacco use is harmful to health.

Illegal tobacco is harmful to our health and also to our economy. Every year, contraband in Canada causes us to lose more than $2 billion in taxes. We must set aside financial and physical resources, since smuggling is going on in our waters, such as Lake Champlain, Lac Memphrémagog, the St. Lawrence River and the Great Lakes. The Canada Border Services Agency and the RCMP do not have the physical resources they need to catch smugglers. They need resources on the ground or else they will not be able to fight crime.

The Canada Border Services Agency is not inspecting packages because of an apparent lack of resources, time and personnel. How is that possible? It is unacceptable in a society like ours. This government brags about creating 1 million jobs. Give me a break. It cannot have created 1 million jobs, because we see no real evidence of that. Instead, what we see is that this government is ineffective and does not take action. Day after day, it makes investments in the wrong places.

Prevention starts with our young people. We need to encourage them to play sports, read books and visit libraries and museums. Not museums that the Conservatives have modelled around their own ideology, but museums that provide an accurate portrayal of history. We must get them interested in things that will help develop their minds and that will open them up to the amazing opportunities and possibilities available to them as citizens of a country as rich and developed as ours.

As I said, we must take action and show leadership, and this leadership must start at the top.

[The Acting Speaker, Conservative, Barry Devolin]

The time provided for government orders has expired. The member for Compton—Stanstead will have five minutes remaining after oral question period.

The House resumed consideration of the motion that Bill S-16, An Act to amend the Criminal Code (trafficking in contraband tobacco), be read the second time and referred to a committee, and of the motion that this question be now put.

Tackling Contraband Tobacco Act

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Mr. Speaker, as I mentioned earlier, I will be sharing my speaking time—that is, the five minutes I have left—with the excellent member for Churchill.

Earlier, I spoke about how tobacco is a substance that is extremely hazardous to peoples' health. I also spoke about the lack of resources, and not just financial resources. Sometimes it is just material or human resources that are needed. It may be that all that is needed is a little time.

Not only is contraband a serious public safety and health problem, but it also results in a loss of tax revenue for various levels of government. The majority of tobacco manufacturers are located in Ontario and Quebec, and that is also where most contraband tobacco enters the country. That is where most tobacco is manufactured and where most contraband tobacco enters and leaves the country. Why? This happens by land and by water. Why is that?

As I said earlier, it is unacceptable that the resources are not being allocated to really fight this.

I found myself wondering about that earlier. I was also thinking that the RCMP recognizes that the increase in organized crime linked to contraband tobacco boosts other crimes. Contraband tobacco funds other criminal activities, such as weapons and drug trafficking.

Introducing mandatory minimum sentences of 90 days, 180 days and two years less a day will not resolve the situation. We know that in organized crime, when a person, a candidate, a soldier—excuse my language—is no longer needed or must be retired, he is replaced. There are pools of recruits who will commit all kinds of crimes. Increasing minimum sentences or further criminalizing contraband tobacco by making a small change to the Criminal Code will not reduce this crime.

There was a seizure in the Eastern Townships the day before yesterday. Unfortunately, 16 troublemakers were involved and they were all repeat offenders connected in some way to organized crime groups. These groups are increasingly organized in terms of technology, computer resources and vehicles.

I would like to tell you a story about something that happened in my riding. A package fell from the sky and all of a sudden a jet boat appeared to pick up the package and quickly take it across the border. The RCMP and the Sûreté du Québec had not done maintenance on their patrol boats in the previous two years and were therefore unable to reach the destination or the target. That is an example of the lack of resources I was talking about and the very serious consequences it can have.

Organized crime has the resources to easily transfer groups, vehicles and goods from one place to another. Why? Because the current government is not doing its job on the ground. It is not looking after the safety of communities or, more importantly, Canadians' health.

As I said before, provincial governments have worked hard to discourage the use of tobacco and drugs and even to prevent young people from suffering the serious consequences of membership in a criminal organization. A great deal of preventive work has been done with young people, and that work must continue. Young people need support. The government must allocate enough money for the youth centres that are located throughout Quebec, so they can hire leaders in the summer. The leaders are often young university students or other community members who help the municipalities and supervise young people during sports activities.

For example, in my riding, in Rock Forest in Deauville, there is a skateboard park. Young people love this sport. They are happy, they are outside and they are developing.

Needlessly exposing them to crime will do nothing to protect the future of our society and the safety of our people.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I appreciate the comments provided by the member. Does he recognize the important role that different provinces play with respect to this? We find there is an increase, for example, in illegal cigarettes when the tax on a package goes up. It is important that we tax cigarettes. The costs of health care as a direct result of people who smoke and of second-hand smoke far exceed the revenue that government collects in tobacco taxes.

When are we going to see more co-operation with some of the provinces in coming to grips with this issue? Not only is this a question of health and government revenue, but it also feeds into gang activity and other forms of illegal activities.

Would the member not agree that if we want to deal with this issue in an aggressive fashion where there will be direct results, we need to start working with some of the departments at the provincial level so there is a higher sense of co-operation so we see more results?