Mr. Speaker, the response from the Canada Revenue Agency (CRA) to the above-noted question follows.
In response to (a), technical rules for the stamping regime will be elaborated through public announcements, excise duty notices and the publication of proposed regulatory amendments in the Canada Gazette, entitled Regulations Amending the Stamping and Marking of Tobacco Products Regulations. In 2010, duty notices were released on the CRA website in July and September, and a consultation draft of the regulations was released to industry, provinces and other stakeholders in November 2010. CRA officials continue to work with officials at both the Department of Justice and the Treasury Board Secretariat to publish the proposed regulations in the Canada Gazette by January of 2011.
In response to (b), as early as 2003, CRA officials were reviewing various initiatives that might respond to the growing issue of the proliferation of contraband tobacco; one option that specifically responded to the challenge of counterfeit and other illicitly produced tobacco products was the concept of enhancing Canada’s excise tobacco stamping regime with a new tobacco excise stamp.
One element of the tobacco compliance strategy was a new enhanced stamping regime based on the development of a new state-of-the-art tobacco excise stamp. This was delineated in the federal budget of 2005.
In response to (c), in February 2005 the CRA began approaching several tobacco manufacturers individually to attain a better understanding of their production facilities and packaging lines for purposes of the adoption of a new excise duty tobacco stamp to be affixed to tobacco product packages. In July 2005, the CRA publicly released a discussion paper entitled “Tobacco Stamping Regime -- Review and Recommendations” to seek representations from various stakeholders. Consultations have been ongoing since the 2005 federal budget announcement. In January 2008 the CRA invited all tobacco licensees to an information session.
In response to (d), following the federal budget of 2005, the CRA conducted a competitive procurement process that resulted in the award of a contract to design, produce and distribute a tobacco stamp incorporating overt and covert security features. The contract was awarded on January 3, 2008, and specifies a firm unit price of $0.00592 per stamp which could, if added on, result in an increase of just over one-half cent to the cost of a stamped tobacco product.
In response to (e), the new stamp contains state-of-the-art overt and covert security features that will enable all levels of the supply and distribution chain, from producer to consumer, to identify legitimate duty-paid tobacco products from contraband. The government expects that the new stamping regime will contribute to reducing the amount of counterfeit and other illicitly produced tobacco products entering the Canadian market. This will result in the enhanced integrity of the tobacco tax system, which supports the Government’s health objectives.