1. September 2005 Direction principale des enquêtes (Spécial Investigations)

2. Revenu Québec 2 PRESENTATION ON CANADIAN UPDATE PROVINCE OF QUÉBEC BIG SKY, MONTANA SEPTEMBER 12, 2005

3. Revenu Québec 3 CANADIAN STEERING COMMITTEE  Composed of representatives from all provinces, territories and the federal governments  They define the actions to be taken  They meet twice a year  Industry notified so that they can make presentations  Assign projects to a Working Group

4. Revenu Québec 4 WORKING GROUP  Completed a survey on ‘Tobacco Tax Exemption for First Nation Indians  Current Projects Generic Returns Cigar definition Survey on Collectors and Wholesalers Licensing Requirements Update our priorities

5. Revenu Québec 5 MISSION Finding measures to fight against tobacco tax evasion is one of the primary missions of Revenue Quebec.

6. Revenu Québec 6 TAX RATES  Cigarettes: 10.3cents/cig or $20.60/carton of 200 cigs  Fine Cut: 10.3 cents/gram or $20.60/bag of 200 grams  Cigars:80% of the retail selling price  Others:*15.85 cents/gram *in respect to tobacco sticks and pre-rolled tobacco, the tax is the higher of either 10.3cents/stick or 15.85cents/gram

7. Revenu Québec 7 PRICES  Cigarettes:about $58.00/carton + 7% GST – major brand Provincial Tax$20.60 Federal Tax$15.85 There are other brands that sell for about $46.00/carton. Less overhead  Fine Cut:about $42.00/bag or can of 200 g + 7% GST Provincial Tax$20.60 Federal Tax$10.80 There are other brands that sell for about $22.00/bag with the required markings (not all products declared). On the black market, you can purchase a bag for about $12.00

8. Revenu Québec 8 MARKING REQUIREMENTS CIGARETTES PacksTear tape, white background, text color black, text Helvetica 8 bold, not less than 4.5 mm. Ex.:. CANADA. DUTY PAID – DROIT ACQUITTÉ – QUÉBEC CartonsStamp, at each end, white background, text color black, text Helvetica 10 bold, not less than 2.5 cm. Ex.: QUÉBEC CasesStamped or printed on at least two sides in black and a height of at least 38.1 mm. Ex.: QUÉBEC

9. Revenu Québec 9 MARKING REQUIREMENTS cont’d FINE CUT Bags or Cans Tear Tape same as pack of cigarettes. Stamp*on the stamp required by CRA, white background, text color black, text Helvetica 8 bold, not less than 4.5 mm. Ex TOBACCO – CANADA – TABAC QUÉBEC DROIT ACQUITTÉ –DUTY PAID Casessame as case of cigarettes. *in reality, it is done simultaneously, on the same stamp

10. Revenu Québec 10 MEASURES  No tax increases  Forming ACCES Committee  Bill 70  Program for tobacco growers  Other measures

11. Revenu Québec 11 NO TAX INCREASES Due to the increasing activity of non tax compliance, primarily with the growing manufactures on Reserves, the Minister of Finance has not increased the tobacco taxes for the last 2 years even if the rest of the Provinces have.

12. Revenu Québec 12 ‘ACCES’ COMMITTEE  Established in 2001  Meets 3 to 4 times a year  Members: Public Security, Finance, Revenue Quebec, Canada Revenue Agency, Quebec Provincial Police, Montreal Police, Municipal Police and Royal Canadian Mounted Police  On ad hoc requests they meet with industry

13. Revenu Québec 13 ‘ACCES’ COMMITTEE cont’d  They define the actions to be taken  In 2004/05 plans were made to take measures against tobacco growers and manufacturers of fine cut tobacco  Revenue Quebec inspects the retailers  The Police investigates the criminal networks

14. Revenu Québec 14 BILL 70  In the Tobacco Tax Act we redefined ‘Carrier’s, Store's and Importer’s Permits’ to include raw leaf tobacco  Oblige Carriers of raw leaf to have a manifest  Oblige tobacco growers to hold proper books and records

15. Revenu Québec 15 TOBACCO GROWERS  Incentives introduced by the Quebec Department of Agriculture to have the tobacco growers grow other crops  10 million dollar program  Buy their machinery and quotas  It will take up to 2 years to buy back all the equipment and dismantle all the dryers

16. Revenu Québec 16 TOBACCO GROWERS cont’d  Introduced the obligation for a tobacco grower to register and obtain a ‘Grower’s Permit’  Obligation to file reports concerning their production and who they sold it to  Went from 59 growers to 4  Revenue Quebec will inspect certain growers on their behalf

17. Revenu Québec 17 OTHER MEASURES  We inspect approximately 2,400 retailers per year (14,000 retailers)  Working with Federal Government on implementing a new ‘Marking Regime’  Leading a publicity campaign with, CRA and RCMP, intended for retailers, on the impacts of illegal commerce

18. Revenu Québec 18 OTHER MEASURES cont’d  Meet with different associations  Negotiating with different Indian Reservations  Coordinate our activities with other organizations  Increase the suspensions of permits and licenses

19. Revenu Québec 19 ANY QUESTIONS??? THANK YOU!!!