[Intl-tobacco] US: Doggett bill on smuggling

[Robert Weissman]

In advance of this week's conference in New York on tobacco smuggling,
U.S. Representative Lloyd Doggett has introduced important legislation,
knowns as The Tobacco Smuggling Eradication Act of 2002, to curb the
smuggling epidemic.

Below is a brief summary of the bill, followed by a slightly longer
outline.

Remarkably, there are now 90 sponsors of the bill in the U.S. House of
Representatives.

The bill does not yet have a bill number, but we'll pass that along as
soon as the bill receives one.

--
Robert Weissman


The Tobacco Smuggling Eradication Act of 2002

U.S. Rep. Lloyd Doggett (D-TX), with the co-sponsorship of 70 of his
colleagues, has introduced The Tobacco Smuggling Eradication Act of
2002.  The World Health Organization (WHO) estimates that 25% of all
cigarettes exported from the U.S. end up on the black market.  The
health consequences of this widespread smuggling are severe because the
number of nicotine-addicted children and poor increases dramatically
with the availability of cheap tobacco.  The Tobacco Smuggling
Eradication Act of 2002 would provide effective and aggressive action
against this pandemic, helping ensure that the U.S. plays a strong role
in combating smuggling.

In addition to undermining worldwide public health efforts, rampant
tobacco smuggling has significant financial implications.  At a time of
tight budgets, state and federal authorities in the U.S. suffer losses
of more than $1.5 billion annually in evaded cigarette taxes.  The
European Union and Canada have each filed suits against U.S. tobacco
companies for promoting vast cigarette-smuggling schemes, and recent
reports have led U.S. authorities to probe allegations that cigarette
makers have violated trade sanctions against Iraq by channeling billions
of dollars of cigarettes into Iraq through intermediaries.  Tobacco
companies profit from selling their products to smugglers who can offer
lower, black-market "tax free" prices, encourage consumption, and build
market share.

Rep. Doggett's bill imposes new labeling and reporting requirements to
allow enforcement officials to track tobacco products, and it allows for
greater information sharing between countries.  It tightens and expands
the permitting requirements for those in the tobacco products
distribution chain to prevent products from slipping out unnoticed, and
it increases penalties for noncompliance.  It also puts more teeth into
a federal law that helps states collect cigarette taxes and gives
jurisdiction over these enforcement provisions to the Bureau of Alcohol,
Tobacco & Firearms.

Let your Representative know that you support this bill and that he or
she should join as a cosponsor!


                                              The Tobacco Smuggling
Eradication Act of 2002

                                                              by Rep.
Lloyd Doggett


Summary

At a time of tight budgets, state and federal authorities in the US
suffer losses of more than $1.5 billion annually in evaded cigarette
taxes.  Additionally, the World Health Organization (WHO) estimates that
25% of all cigarettes exported from the US end up on the black market.
The European Union and Canada have each filed suits against US tobacco
companies for promoting vast cigarette-smuggling schemes, and recent
reports have led US authorities to probe allegations that cigarette
makers have violated trade sanctions against Iraq by channeling billions
of dollars of cigarettes into Iraq through intermediaries.  Tobacco
companies profit from selling their products to smugglers who can offer
lower, black-market "tax free" prices, encourage consumption, and build
market share.

This rampant smuggling has profound worldwide health and financial
implications.  A recent study by WHO found that over 70% of the 8.4
million tobacco deaths that are projected to occur in 2020 will occur in
developing countries, where the supply of smuggled tobacco products is
plentiful.  Effective and aggressive action against tobacco smuggling
represents one key strategy necessary to address this pandemic. The
Tobacco Smuggling Eradication Act of 2002 would ensure that our country
is participating in such action.

This bill imposes new labeling and reporting requirements to allow
enforcement officials to track tobacco products, and it allows for
greater information sharing between countries.  It tightens and expands
the permitting requirements for those in the tobacco products
distribution chain to prevent products from slipping out unnoticed, and
it increases penalties for noncompliance.  It also puts more teeth into
a federal law that helps states collect cigarette taxes and gives
jurisdiction over these enforcement provisions to ATF (the Bureau of
Alcohol, Tobacco and Firearms).


The following is a summary of the bill's key provisions:

Title I  Amends the Internal Revenue Code (IRC) as follows:

New Marking and Labeling Requirements:
*       requires unique serial numbers on all tobacco packages
manufactured or imported to facilitate tracking by enforcement officials

*       requires all packages bound for export to be marked for export,
to prevent illegal reentry into the US
*       requires all packages to be sold on an Indian reservation to be
labeled so
*       requires that these labels be on the innermost package (inside
the plastic) to prevent tampering

New Permit Requirements:
*       adds wholesalers to those who must apply for a permit to
distribute tobacco
*       requires that all parties granted a permit comply not only with
the IRC provisions, but also the requirements of the Contraband
Cigarette Trafficking Act (CCTA)

New Recordkeeping and Reporting Requirements:
*       requires reports from exporters on shipments from the US in
order for the Secretary of the Treasury to ensure shipments are reaching
final destination

*       authorizes Secretary of the Treasury to enter into agreements
with foreign governments to share information to verify these filed
reports.  Information must be held in confidence by both governments.

*       requires retailers to keep tobacco-related ordinary business
records for inspection, to enable authorities to ensure shipments
reached their reported destination

*       adds wholesalers to those who must keep records on the chain of
custody of tobacco products

New/Expanded Offenses Section:
*       creates new offenses and expands existing ones to prohibit
reentry of exported tobacco, stop shipment to those without the required
permit, and prevent tampering with labels

Penalties/Fines:
*       criminal monetary penalties shall be determined by 18 USC
Section 3571, or five years imprisonment, or both
*       civil penalties shall be increased to $10,000 for intentional
acts


Title II  Amends the Contraband Cigarette Trafficking Act and the
Jenkins Act as follows:

Jurisdiction:
*       expands to include cigars, smokeless and pipe tobacco, as well
as cigarettes
*       jurisdictional threshold lowered to 30,000 cigarettes (from
60,000) or the equivalent of other tobacco products
*       moves (to the CCTA) and expands the provisions of the Jenkins
Act, which contains reporting requirements to the state tobacco
administrators

New Offenses:
*       it is unlawful to make false statements or falsify documents by
anyone shipping, selling or distributing at least 30,000 cigarettes or
the equivalent in a single transaction or a series of related
transactions
*       it is unlawful to fail to maintain records or reports, alter
markings, or interfere with an inspection

Notice Required for Interstate Sales:
*       expands application of requirement to file notice with the state
tax administrator before shipping, selling or distributing into any
state
*       notice shall include recipient's name, brand, and quantity