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
1  Definitions
2  Director
 
Part 2 -- Licences
3  Definitions
4  Prohibitions
5  Issuing of a licence
6  Licence fee
 
Part 3 -- Price Control
7  Definitions
8  Order that base prices apply
9  Price adjustment
10  Price re-assessment
 
Part 4 -- General
11  Suspending or cancelling a licence
12  Right of appeal
13  Appeal to court
14  Inquiry powers
15  Injunction
16  Inspection and audit powers
17  Confidentiality
18  Immunity for acts or omissions in good faith
19  Power to make regulations
20  Consequential Amendment
21  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

2 (1) The Lieutenant Governor in Council may appoint and set the remuneration and other terms and conditions of employment of the director.

(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

4 (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

5 (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

6 (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

8 (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

9 (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

10 (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

11 (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

12 (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

13 (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

15 (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

16 (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 government or the government of Canada.

Immunity for acts or omissions in good faith

18 (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

19 (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

20 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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