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1998/99 Legislative Session: 3rd Session, 36th Parliament

FIRST READING

The following electronic version is for informational purposes only.

The printed version remains the official version.

HONOURABLE PENNY PRIDDY

MINISTER OF HEALTH AND MINISTER

RESPONSIBLE FOR SENIORS

BILL 29 – 1998

TOBACCO FEE ACT

Contents

Section

Part 1 – Introduction

Definitions

Director

Part 2 – Licences

Definitions

Prohibitions

Issuing of a licence

Licence fee

Part 3 – Price Control

Definitions

Order that base prices apply

Price adjustment

Price re-assessment

Part 4 – General

Suspending or cancelling a licence

Right of appeal

Appeal to court

Inquiry powers

Injunction

Inspection and audit powers

Confidentiality

Immunity for acts or omissions in good faith

Power to make regulations

Consequential Amendment

Commencement

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province

of British Columbia, enacts as follows:

Part 1 – Introduction

Definitions

1 In this Act:

"consumer" means a person who, for the person's own use or consumption, or for

the use or consumption by others at the person's expense, or on behalf of, or as

the agent for, a principal who wishes to acquire a tobacco product for use or

consumption by the principal or other persons at the principal's expense,

(

a) acquires the tobacco product in British Columbia, or

(

b) in the case of a person ordinarily resident in British Columbia, or carrying

on business in British Columbia, brings the tobacco product acquired

outside British Columbia into the Province;

"director" means the director appointed under

section 2;

"fiscal year" means the period from April 1 in one year to March 31 in the next year;

"licence" means a licence issued under

section 5;

"licence fee" means, for a tobacco company, the licence fee calculated under

section 6 for the tobacco company;

"retailer" means a person who sells or offers to sell, in British Columbia, a tobacco

product to a consumer;

"tobacco company" means, subject to

section 7, a corporation that manufactures,

fabricates, produces or packs a tobacco product for the personal use or

consumption of consumers;

"tobacco product" means cigarettes, tobacco sticks, loose tobacco or tobacco in a

prescribed form that are marked or stamped as required under a marking system

established under

section 44 (2) (

k) of the Tobacco Tax Act ;

"tobacco stick" means a roll or tubular construction of tobacco intended for

smoking, other than a cigar, that requires further preparation to be consumed.

Director

(1) The Lieutenant Governor in Council may appoint and set the remuneration and

(2) The Pension (Public Service) Act applies to the director as an employee.

Part 2 – Licences

Definitions

3 In this Part, "wholesaler" means a person who sells or offers to sell, in British

Columbia, tobacco products for the purpose of resale.

Prohibitions

(1) A wholesaler or retailer must not sell, or offer to sell, for consumption in British

Columbia a tobacco product that is manufactured, fabricated, produced or packed

by a tobacco company unless the tobacco company

(

a) registers with the director in the prescribed manner, and

(

b) holds a licence that is not suspended.

(2) Subsection (1) does not apply to a quantity of a tobacco product that was

delivered to a wholesaler or retailer while the tobacco company that manufactured,

fabricated, produced or packed the quantity

(

a) was registered with the director in the prescribed manner, and

(

b) held a licence that was not suspended.

Issuing of a licence

(1) An application for a licence must be

(

a) made in the prescribed form and include the prescribed information, and

(

b) received by the director

(

i) by August 31, 1998, to be considered for the 1998/99 fiscal year, and

(ii) beginning in 1999, by January 31, to be considered for the upcoming

fiscal year.

(2) Unless

section 6 (4) applies, the director must not issue a licence to a tobacco

company until the tobacco company pays the licence fee.

(3) The term of a licence is

(

a) for the 1998/99 fiscal year, from the date of issue until March 31, 1999, and

(

b) for each following fiscal year, from the date of issue until the end of the

fiscal year.

(4) The director may refuse to issue a licence if the information included with the

application is inaccurate and, if the issue of a licence is refused, the director must

provide written reasons for the refusal to the applicant.

(5) The holding of a licence confers no right or privilege other than to exclude a

wholesaler or retailer from the prohibition in

section 4 respecting the tobacco

products of the tobacco company that holds the licence.

(6) A licence becomes invalid if transferred or assigned from the tobacco company

to which it is issued.

Licence fee

(1) The purpose of imposing licence fees is to help defray the cost to government to

develop and implement a comprehensive tobacco consumption reduction

strategy.

(2) The total annual revenue to government from licence fees is targeted at

(a) $20 000 000 for the 1998/99 fiscal year, and

(

b) for each fiscal year following the 1998/99 fiscal year, a prescribed amount.

(3) Subject to subsection (4), the licence fee that a tobacco company must pay must

be calculated by the director using the following formula:

LF = T x (S/TS)

where

"LF" means the licence fee that the tobacco company must pay;

"T" means the total annual revenue to government for the fiscal year targeted under

subsection (2);

"S" means the value of all tobacco products of the tobacco company that the tobacco

company sold to wholesalers in the preceding calendar year;

"TS" means the value of all tobacco products sold to wholesalers in the preceding

calendar year by all tobacco companies not exempt under subsection (4).

(4) A tobacco company is exempt from the requirement to pay a licence fee if, as

calculated by the director under subsection (3), the total value of the tobacco

products the tobacco company manufactured, fabricated, produced or packed that

were sold in the preceding calendar year to wholesalers for consumption in

British Columbia is less than 5% of the value of all tobacco products sold to

wholesalers for consumption in British Columbia in that period by all tobacco

companies.

Part 3 – Price Control

Definitions

7 In this Part:

"adjusted price" means, for a tobacco product of a tobacco company, the price most

recently approved under

section 9 (1) as, if applicable, most recently calculated

under

section 10 (3);

"base price" means, for a tobacco product of a tobacco company, the lowest price

that the tobacco company offers to sell, on the date the order under

section 8 is

made, the tobacco product to a wholesaler for distribution in British Columbia

as, if applicable, most recently calculated under

section 10 (3) if the price has not

been adjusted under

section 9;

"tobacco company" does not include a tobacco company that is exempt under

section 6 (4);

"wholesaler" means a person who

(

a) sells or offers to sell, in British Columbia, tobacco products for the purpose

of resale, and

(

b) is not

(

i) a subsidiary or an affiliate as described in

section 1 of the Company

Act , of a tobacco company, or

(ii) controlled, as described in

section 1 of the Company

Act , by a tobacco company.

Order that base prices apply

(1) If satisfied that all or part of the cost to tobacco companies of licence fees may

be, or may have been, passed on in whole or part to consumers, the Lieutenant

Governor in Council may order that the base prices of tobacco products apply.

(2) Each tobacco company must report to the director in the prescribed form 30 days

after an order is made under subsection (1) the base price of each tobacco product

it offers for sale to wholesalers for distribution in British Columbia.

(3) Beginning 30 days after an order is made under subsection (1), a tobacco

company may not sell, or offer to sell, a tobacco product to a wholesaler for distribution

in British Columbia at a price that exceeds the greater, for the tobacco

product, of its

(

i) base price, and

(ii) adjusted price.

Price adjustment

(1) On application by a tobacco company, the director must approve a price for a

tobacco product of the tobacco company that is greater than the base price for the

tobacco product provided the director is satisfied that the cost to the tobacco

company of a licence fee is not included in the calculation of the price.

(2) A tobacco company may not make an application under subsection (1) respecting

a tobacco product, within 12 months of any other application it makes under

subsection (1) respecting the tobacco product.

Price re-assessment

(1) Beginning 30 days after an order under

section 8 (1) is made, the director may

hold a hearing under this

section if satisfied that a tobacco company may be

including, or have included before or after this

Part comes into force, the cost to

the tobacco company of a licence fee in the price at which the tobacco company

sells, or offers to sell, a tobacco product to a wholesaler for distribution in British

Columbia.

(2) To hold a hearing under subsection (1), the director must

(

a) deliver to the tobacco company written notice of the hearing, and

(

b) give the tobacco company an opportunity to show why the price at which

the tobacco company sells, or offers to sell the tobacco product should not

be decreased under subsection (3).

(3) If the director concludes at the hearing that the price at which tobacco company

sells, or offers to sell, a tobacco product includes the cost to the tobacco company

of a licence fee

(

a) the director must calculate the price at which the tobacco company should

be selling the tobacco product to not include the cost to the tobacco

company of the licence fee, and

(

b) the additional revenue the tobacco company derived by selling the tobacco

product before or after this

Part came into force at more than the price

calculated under paragraph (

a) is a debt owed by the tobacco company to

the government.

Part 4 – General

Suspending or cancelling a licence

(1) The director may cancel the licence of a tobacco company, or suspend the licence

for a period of up to 90 days without advance notice to the tobacco company, if

satisfied that the tobacco company

(

a) has submitted inaccurate information to obtain the licence, or

(

b) has not complied with

section 8 (2) or (3).

(2) Before cancelling a licence under subsection (1), the director must

(

a) deliver to the tobacco company written notice of the proposed cancellation

and the reasons for it, and

(

b) give the tobacco company an opportunity to show why the licence should

not be cancelled.

Right of appeal

(1) If a tobacco company disputes the decision of the director

(

a) to refuse to issue a licence,

(

b) to calculate the amount of the licence fee, or

(

c) to suspend or cancel a licence

respecting the tobacco company, the tobacco company may, within 90 days after

the date on the notice of the decision, serve notice of appeal on the minister.

(2) The notice of appeal must be in writing and must be addressed to the minister.

(3) The notice must set out clearly the reasons for the appeal and all facts relative to

it.

(4) On receiving the notice of appeal, the minister must

(

a) consider the matter and confirm, reverse or vary the decision from which the

appeal is made, and

(

b) promptly notify the tobacco company that brought the appeal of the

minister's decision in the matter.

Appeal to court

(1) A decision of the minister under

section 12 may be appealed to the Supreme

Court by way of an originating application.

(2) The Rules of Court relating to originating applications apply, but Rule 49 does

not apply.

(3) A petition must be filed in the court registry within 90 days after the date on the

minister's notification of decision.

(4) Within 14 days after the filing of the petition under subsection (3), the petition

must be served on the government in accordance with

section 8 of the Crown

Proceeding Act and the government must be designated "Her Majesty the Queen

in right of the Province of British Columbia".

(5) The court may dismiss the appeal, allow the appeal, vary the decision from which

the appeal is made or refer the decision back to the director for reconsideration.

(6) An appeal lies from a decision of the court to the Court of Appeal with leave of

a justice of the Court of Appeal.

Inquiry powers

14 To carry out the director's powers, duties and functions under this Act, the director has

the powers of a commissioner under sections 12, 15 and 16 of the Inquiry Act and may

accept written submissions or any other form of evidence.

Injunction

(1) The minister may apply to the Supreme Court for an injunction ordering a

tobacco company to cease selling or offering to sell tobacco products for

consumption in British Columbia if the tobacco company

(

a) does not have a licence or the licence is suspended, or

(

b) sells or offers to sell a tobacco product to a wholesaler at a price that

exceeds the price allowed under

section 8 (3).

(2) If a wholesaler as defined in

section 3 or a retailer sells or offers to sell a tobacco

product contrary to

section 4, the minister may apply to the Supreme Court for an

injunction ordering the wholesaler or retailer to cease selling or offering to sell

tobacco products for consumption in British Columbia until the wholesaler or

retailer

(

a) pays the government's costs in making the application for the injunction,

and

(

b) gives security in a form the Supreme Court considers appropriate that the

wholesaler or retailer will no longer sell or offer to sell a tobacco product

contrary to

section 4.

Inspection and audit powers

(1) The director may appoint inspectors and auditors for the purposes of this section.

(2) Except as limited by subsection (4), an inspector or auditor appointed under

subsection (1) may enter at any reasonable time the business premises occupied

by a person, or the premises where the records of the person are kept, in order to

(

a) determine whether this Act and the regulations are being or have been

complied with,

(

b) inspect, audit and examine books of account or other records, or

(

c) ascertain the quantities of tobacco on hand, used or sold by the person.

(3) A person occupying premises referred to in subsection (2) must produce all books

of account or other records that may be required by an inspector or auditor

appointed under subsection (1) and must answer all questions of that inspector or

auditor regarding the matters referred to in subsection (2).

(4) The power to enter a place under subsection (2) must not be used to enter a

dwelling occupied as a residence without the consent of the occupier except

under the authority of a warrant issued under subsection (5).

(5) On being satisfied by evidence on oath that there are in a place records or other

things for which there are reasonable grounds to believe that they are relevant to

the matters referred to in subsection (2), a justice may issue a warrant authorizing

a person named in the warrant to enter the place in accordance with the warrant

in order to exercise the powers referred to in subsection (2) (

a) to (c).

(6) If required by the director, a wholesaler as defined in

section 3 or a retailer must

provide to the director or an inspector or auditor appointed under subsection

(1) all books of account and other records that the director considers necessary to

determine whether this Act and the regulations are being or have been complied

with.

(7) A person must not

(

a) hinder, molest or interfere with an inspector or auditor doing anything that

the inspector or auditor is authorized to do under this section, or

(

b) prevent or attempt to prevent an inspector or auditor from doing anything

that the inspector or auditor is authorized to do under this section.

Confidentiality

17 A person who has custody of or control over information or records under this Act

must not disclose the information or records to any other person except

(

a) in the course of administering or enforcing this or a taxation Act,

(

b) in court proceedings relating to this or a taxation Act,

(

c) as provided in, or ordered under,

section 39 (3), 40 (1), 99 (5) or 100 (1) of

the Family Relations Act or

section 8 (3) or 9 (2) of the Family Maintenance

Enforcement Act ,

(

d) under an agreement that

(

i) is between the government and another government,

(ii) relates to the administration or enforcement of taxation enactments,

and

(iii) provides for the disclosure of information and records to, and the

exchange of similar information and records with, that other

government, or

(

e) for the purpose of the compilation of statistical information by the

Immunity for acts or omissions in good faith

(1) No action for damages lies or may be brought against the director, or any person

appointed, engaged or retained to assist the director, because of anything done or

omitted in good faith

(

a) in the performance or intended performance of any duty under this Act, or

(

b) in the exercise or intended exercise of any power under this Act.

(2) Subsection (1) does not absolve the government from vicarious liability for

an act

or omission for which it would be vicariously liable if this

section were not in

force.

Power to make regulations

(1) The Lieutenant Governor in Council may make regulations referred to in

section 41 of the

Interpretation Act .

(2) Without limiting subsection (1), the Lieutenant Governor in Council may make

regulations as follows:

(

a) prescribing a form of tobacco for the purpose of the definition of "tobacco

product" in

section 1;

(

b) prescribing the manner for registration under

section 4;

(

c) prescribing the form of application for a licence and the information that

must be submitted with the application for a licence;

(

d) prescribing an amount for the purpose of

section 6 (2) (b);

(

e) prescribing the form of a report under

section 8 (2).

Consequential Amendment

Tobacco Sales Act

Section 12 (1) of the Tobacco Sales Act, R.S.B.C. 1996, c. 451, is repealed and the

following substituted:

(1) A person who contravenes

section 2, 3 (4) or 10.1 of this Act, contravenes a

regulation made under

section 11 (2) (a), (

c) or (

e) of this Act or contravenes

section 4 of the Tobacco Fee Act commits an offence and is liable on conviction

(

a) for a first offence to a fine of not more than $2 500 or to imprisonment for

a term not exceeding 3 months, or both the fine and imprisonment, and

(

b) for a subsequent offence to a fine of not more than $5 000 or to imprisonment

for a term not exceeding 6 months, or both the fine and imprisonment.

Commencement

21 This Act comes into force by regulation of the Lieutenant Governor in Council.

Explanatory Note

This Bill allows an annual fee to be imposed on manufacturers wishing to have their tobacco products sold in British Columbia. The annual fee for a manufacturer is based on the market share of the manufacturer's tobacco products in the preceding calendar year in British Columbia. Manufacturers having a British Columbia market share of less than 5% in the preceding calendar year are exempt from the requirement to pay an annual fee.

The revenue from these annual fees will be used to help defray the Provincial government's costs in developing and implementing a comprehensive tobacco consumption reduction strategy.

Part 3 of this Bill allows the director

(

a) to control the capacity of a tobacco company to pass on to wholesalers, and

through them to consumers, the cost it incurs in paying an annual fee, and

(

b) to recover any profits a tobacco company makes by passing on those costs to

wholesalers.

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