Bill S-16, An Act to amend the Criminal Code (trafficking in contraband tobacco) Senator Jane Cordy June 4th, 2013
Leave having been given to revert to Government Business, Bills, No. 1:
On the Order:
Resuming debate on the motion of the Honourable Senator White, seconded by the Honourable Senator McIntyre, for the third reading of Bill S-16, An Act to amend the Criminal Code (trafficking in contraband tobacco).
Hon. Jane Cordy: Honourable senators, I rise to speak today to Bill S-16, An Act to amend the Criminal Code (trafficking in contraband tobacco). All honourable senators are aware of the health risks associated with smoking. I am supportive of proposed legislation that aims to reduce tobacco usage among Canadians and that discourages Canadians, in particular young Canadians, from taking up smoking. People who begin smoking at a young age are more likely to keep smoking.
Bill S-16 deals with contraband tobacco. When considering contraband tobacco, we must consider the involvement of organized criminal elements, loss of tax revenue to provincial and federal governments, and the substantial financial loss to convenience store owners, who sell tobacco legally because contraband tobacco sellers do not follow the rules. A Macdonald-Laurier Institute study estimates the potential losses in tax revenue at about $900 million to $1.2 billion per year.
Contraband tobacco is closely linked to smuggling and organized crime. If people are trafficking contraband tobacco, it is likely they are involved in other illegal trafficking activities. Profits from contraband tobacco are often diverted to other illegal activities.
Previous governments have taken many legislative steps to curb the use of tobacco products in Canada: advertising restrictions; graphic health warnings on tobacco packaging; prohibiting sales to those under 18; prohibiting the display of tobacco products in stores; and restricting flavoured tobacco products, which appeal to children and often lure young people into smoking.
However, studies have shown that the biggest deterrent to smoking has always been and continues to be the cost. The more prohibitive the cost, the less people smoke. Unfortunately, the prohibitive cost of cigarettes creates the black market for contraband tobacco products, which are much cheaper. The cheap price and no age check mean that youth, who should not be smoking, have little trouble getting contraband tobacco. Studies show that 33 per cent of cigarettes in Ontario high schools and over 40 per cent of those in Quebec high schools were contraband. This is scary not only because of the health risk, but also because we know that organized crime distributes the contraband product.
Many witnesses who appeared before the Legal Affairs Committee testified that higher tobacco taxes create a higher demand for black market tobacco products. The Legal Affairs Committee heard from Alex Sholten, President of the Canadian Convenience Stores Association, that there is a clear correlation between increased taxes and increased contraband activity. That increased cost often leads consumers to a contraband product.
Contraband tobacco products successfully circumvent all the measures and control checks established by governments and provide a cheap and easily accessible alternative product. Much of the production of contraband products takes place on First Nations territories in Ontario and Quebec, which share a border with the United States, and in unlicensed American production facilities. These facilities lack any kind of control and, in many instances, these products contain contaminants and impurities.
I was surprised to hear at the committee hearings that contraband tobacco also comes into Canada from China. As these contraband tobacco products work their way across Canada, anyone can cheaply purchase a bag of black market cigarettes and taxes are avoided.
First Nations communities have become the focus of law enforcement because of the unique situation they find themselves in. Akwesasne territory, for instance, is spread across parts of Ontario, Quebec and the United States. Contraband cigarettes are manufactured on the U.S. portion of the territory and smuggled to the Canadian side where they are moved off-territory to be sold.
Akwesasne leaders expressed concern about the direction that the federal government is taking with Bill S-16. They fear that their communities are being unfairly targeted and their people disproportionately prosecuted when the majority of those taking part in these activities are from off-territory and primarily run by organized crime.
Politically, the Mohawk Council of Akwesasne has no harsh objection to what Bill S-16 proposes to accomplish. However, they are concerned with the impacts of the bill. The MCA and the governments of Ontario and Quebec have worked together to build a cooperative relationship around common interests. There should be the same cooperation between the Mohawk Council and the federal government. The MCA was given a draft of the bill to look at about a month before the bill was at the Senate Legal Affairs Committee, but they were not consulted when it came to drafting the bill or with the provision of criminalizing the offence. Surely the federal government could work with the Mohawk Council to address topics of concern regarding contraband tobacco and the multi-jurisdictional nature of Akwesasne. If the Ontario and Quebec governments can build a cooperative relationship, then surely the Government of Canada can do so as well.
Chief Brian W. David of the Mohawk Council of Akwesasne stated before the committee:
Akwesasne is sounding the alarm once more on the impact that Bill S-16 will have on the Mohawks of Akwesasne and how it is another step in the wrong direction. It will only further criminalize our community members and perpetuate a negative image of Akwesasne. It is not the approach that we have been proposing to Canada, Ontario and Quebec to effectively deal with contraband tobacco that can be supported by Akwesasne.
Bill S-16 provides law enforcement and the courts with another tool to combat the issue of trafficking contraband tobacco. Unfortunately, as long as the market conditions are right and there is the need for cheap, easily accessible tobacco products, it seems these activities will continue to persist.
A multi-facetted approach to stop trafficking of contraband tobacco is truly needed. Not only must there be a focus on traffickers, but also on consumers. Better cooperation with our neighbours to the south, provincial counterparts and on-reserve leaders and policing organizations would be helpful. Additionally, increased resources and partnership efforts should be aimed at the reduction of Canadians' smoking habits overall. If the demand is not there, the criminal activities will cease.
I believe that having the trafficking of contraband tobacco included in the Criminal Code lends a greater aura of criminality to the offence. When asked about the current sentencing patterns and mandatory minimum sentences, an official from the justice department who appeared before the committee stated that they have not analyzed the sentencing patterns under the Excise Act to see if the courts were being overly lenient. He believed that the courts were levying fines for the most part, but in the last few years, they have begun to impose prison sentences. The Department of Justice was simply asked to craft a bill that would insert mandatory minimum sentences into the code for repeat offenders.
I asked Mr. Trevor Bhupsingh, Director General, Law Enforcement and Border Strategies Directorate, Public Safety Canada at committee why we were moving forward with mandatory minimums when there was not any proof that they were effective. He responded that he did not have studies to prove their deterrent effect in other jurisdictions where they have been used and that he did not have any documentation that would proactively suggest they were a deterrent. He said that this was the approach the government had decided to take. The government believes it to be part of the solution to the problem and that mandatory minimum sentences address the seriousness of the crime.
The RCMP is establishing a strengthened 50-officer anti-contraband tobacco force and an additional 10 new First Nations police officers dedicated to addressing organized crimes in First Nations communities. Unfortunately, I thought the 50-officer anti-contraband tobacco force was 50 new positions. However, that is not the case. The 50 officers are being reassigned from other priority areas. The force will be funded within existing budgets. While I believe the anti-contraband tobacco force of 50 officers and 10 new First Nations police officers is a great idea, it is unfortunate that the 50 RCMP officers on the task force are not new positions but, rather, reassignments. What happens to the other areas from which they have been removed?
By adding the trafficking of contraband tobacco to the Criminal Code, the hope is that it will dispel the idea held by consumers that these products are just tax avoidance and cheap cigarettes. It should also remind consumers that this is a criminal activity, and it should not be viewed as a victimless crime. These are serious crimes.
I hope that including these same offences under the Criminal Code has the effect desired by Superintendent Carson Pardy. When he appeared before the committee, he stated:
... the current provincial Tobacco Tax Act is tax legislation, and the deterrence there deals with the evasion of taxes associated with the activity. This proposed legislation is essentially criminalizing that same process, and in my respectful opinion the criminalization of this will do more to deter than the fines will alone.
We heard, in committee, about the limitations placed on provincial police forces, unless they are working in a joint effort with the RCMP, when combatting contraband trafficking. We heard the example of a case that was dismissed because the Ontario Provincial Police lacked jurisdiction under the Customs Act. These same restrictions apply under the Excise Act as well. This prompted the committee to attach the following observation, which the committee believes would assist law enforcement, for the government to consider:
a) amending the definition of an "officer" in section 2 of the Customs Act as follows:
i) "Officer" means a person employed in the administration or enforcement of this Act...and includes any member of the Royal Canadian Mounted Police or any provincial police force.
b) designating all provincial police forces for the purposes of enforcement of the Excise Act under section 10 of that Act.
I believe this is an excellent observation made by the committee, and I hope that the government will look at it seriously and act quickly to make what would be a most helpful change in fighting contraband tobacco activities.
We heard in the committee that law enforcement does not have a clear picture of what the total universe looks like in terms of contraband. No one has a handle on this. Let us hope that the RCMP's Contraband Tobacco Enforcement Strategy and the federal tobacco contraband strategy gets this clear picture.
Every strategy and every plan should know what has to be done. We do know that organized crime networks are involved in the production and distribution of contraband tobacco. Bill S-16 hopefully will help enforcement agencies to address this serious problem. We will not solve the problem until we get to the heart of it and get what was referred to in committee as the "clear picture."
Honourable senators, I do not want to leave the impression that only contraband tobacco is harmful. Contraband tobacco comes with a variety of issues, most notably health concerns and criminal activity, but tobacco is tobacco. It is toxic and harmful to our health. We know it can lead to cancer and heart disease.
A few weeks ago I spoke at Auburn Drive High School in Cole Harbour about what the Senate does. I explained that bills could be introduced in the Senate, and I gave the example of Bill S-16. I went on to talk about the dangers of contraband tobacco. It was unregulated, there was no quality control, and it could contain disgusting things. A student in the front row said, "Well, isn't all tobacco bad for you?" Yes, honourable senators, all tobacco is bad for you.
I would like to thank Senator White for the work he has done in promoting this bill. I would also like to thank Senator Runciman, the Chair of the committee, who was always fair when presiding, and Senator Fraser, the Deputy Chair of the committee. As a non-member of the Standing Senate Committee on Legal and Constitutional Affairs, I was most impressed by the hard work of all the senators on the committee, who asked probing questions and who worked together on the excellent observation.
I do not believe mandatory minimum sentencing has a deterrent effect. In fact, when I spoke to the Justice Department official, he stated that the deterrent effect is speculative. Yet, once again, this government's solution with any new crime bill is mandatory minimums. As I said at second reading, surely we can do better than same old, same old.
While I disagree with the concept of mandatory minimum sentencing, I am hopeful that other changes brought in by Bill S- 16 will be helpful in the fight against the trafficking of contraband tobacco.