Canada Customs & Revenue Agency
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Released: 15 April, 1999

Government Releases Legislative Proposals And Draft Regulations For The Taxation Of Spirits, Wine And Tobacco Products

Secretary of State (International Financial Institutions) Jim Peterson, on behalf of Finance Minister Paul Martin, today released legislative proposals for a new framework for the taxation of spirits, wine and tobacco products. At the same time, Revenue Minister Herb Dhaliwal released draft regulations for the new taxation structure.

The legislative proposals and draft regulations build on the proposals contained in the February 1997 Discussion Paper on the Excise Act Review. The Review is a joint project undertaken by the Department of Finance and Revenue Canada to review and modernize the Excise Act and related statutes dealing with the taxation of alcohol and tobacco products. The Review focuses on modernizing the legislative and administrative structure of federal taxation of alcohol and tobacco products. The Review does not address tax rates or base issues.

Mr. Peterson said, "By removing the existing onerous controls on facilities and equipment, the legislative proposals released today will provide affected businesses with greater flexibility to organize their commercial affairs and to respond more quickly to market changes." He added that the legislative proposals will continue to protect federal excise revenues.

Mr. Dhaliwal stated, "The modernized legislation and regulations being proposed today will directly benefit affected businesses by helping to reduce their costs of administration and compliance. The new excise framework will allow Revenue Canada to improve its level of service to its clients while also making it easier to enforce the regulations." He further mentioned that new penalties and enforcement procedures will ensure that those who break the law or engage in the smuggling of alcohol or tobacco products will be dealt with appropriately and effectively by law enforcement agencies.

The legislative proposals incorporate key features of the new excise framework that was outlined in the Discussion Paper, including a production levy on spirits, wine and tobacco products, and modernized and simplified administration and compliance functions. As well, the proposals include a number of revisions to the original Review recommendations that reflect comments received during the extensive consultation process with industry associations, businesses, provincial liquor boards and other interested groups.

The attached backgrounder provides an overview of the major changes to the proposed excise framework.

The legislative proposals and draft regulations are available on the Internet at http://www.fin.gc.ca/ or /. Copies may also be obtained by contacting the Department of Finance Distribution Centre at (613) 995-2855.

Interested parties wishing to comment on the proposals are invited to send written submissions by June 30, 1999 to the following address:

Excise Act Review Group
Revenue Canada and the Department of Finance
16th Floor - East Tower - 140 O'Connor Street
Ottawa, Ontario
K1A 0G5

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