Targeting a September launch of the new excise stamp for tobacco products, the Ministry of Finance is providing details of related regulations and procedures to educate manufacturers, vendors and purchasers of such goods to ensure a smooth and beneficial transition for all concerned.

Parliament passed the new Excise Stamp (Tobacco Products) Control Act (No. 27 of 2013) in April, with a view to stemming the leakage of an important national revenue source. Efforts to avoid paying the excise tax on tobacco products as required by law have led to the growth of illegal trafficking of brand-name and counterfeit cigarettes, cigars and other tobacco goods. Prime Minister Perry Christie in the budget communication announced that his Government expects the new legislation to produce an additional $20 million for the Public Treasury.

The ultimate authority over the excise taxes and new tobacco product stamp resides with the Minister of Finance, but the practical application of the law and oversight of associated procedures is delegated to the Financial Secretary or persons whom the Financial Secretary authorises. This includes the registration of vendors, the sale of the excise stamp and collection of the associated fees, the designation and assignment of Excise Officers and ordering of inspections to ensure compliance.

The new excise legislation attacks the illegal tobacco trade on several fronts. Central to the Ministry of Finance’s campaign against non-compliance, as regards payment of the excise tax and related fees, is the registration of eligible manufacturers and vendors of tobacco products. No one other than registered companies or individuals in possession of valid certificates of registration will be allowed to import into or manufacture tobacco products in The Bahamas or sell such products. Exempted from this requirement are those who import commodities for personal use in quantities not exceeding the duty-free allowances. Included under this provision are residents, visitors and members of the diplomatic corps.

The new excise legislation lays down very stringent rules regarding eligibility for registration. According to its terms, applicants for registration must not have any bankruptcy order imposed on them or any pending. In the five years immediately preceding the date of the application, applicants must not have been convicted of a criminal offence or acted to defraud the Government. Individual applicants must be at least 18 years old and all applicants must be up to date with all National Insurance payments. Furthermore, applicants must provide the Financial Secretary with a bond matching the excise tax payable on the value of estimated imports or domestic manufactures.

As a vital adjunct to ensuring compliance, the Government has produced the new excise stamp that must be affixed to the packaging of tobacco products to show Excise Officers and honest purchasers that the tax has been paid. The Excise Stamp carries a bar code that can be read by a special electronic device to assure Excise Officers that manufacturers, importers and vendors are properly registered and have paid the appropriate fees due to the Revenue Office. The absence of the appropriate Excise Stamp on a tobacco product gives notice that the excise tax has not been paid, which can lead to product seizure and a number of penalties.

Once an applicant has met all requirements, a registration certificate will be issued. Such certification is subject to renewal, amendment and cancellation as dictated by the law and the eligibility of the registered entity or individual. In the normal course of events, registrants in good standing and in possession of a valid excise certificate may apply to the Financial Secretary for the purchase and issuance of excise stamps for affixing to imported or domestically manufactured tobacco products. Upon the request of registrants, the Revenue Office will deliver stamps to an overseas manufacturer. All dealings relating to registration and stamp purchase require the use of prescribed forms issued by the Financial Secretary.

A spokesperson for the committee that the Ministry of Finance has appointed to oversee the excise stamp roll-out explained the importance of compliance with the law and co-operation with the proper authorities. “As is the case with all laws, there are penalties to be paid for non-compliance with the law. Failure to register as a vendor of tobacco products or pay for and affix the Excise Stamp can result in stiff penalties ranging from $1,000 to tens of thousands of dollars and/or jail time, depending on the nature and frequency of the offense,”

“It is important for the public to understand that those who fail to pay taxes are not just defrauding the Government, but cheating all Bahamians. It’s the Bahamian people, all of us, who stand to benefit most from the more than $20 million boost in national revenues that will come from tighter controls on the payment of excise on tobacco products. The proceeds of the excise tax go directly to the Public Treasury and will help the Government to manage its budget; fund public hospitals, clinics and health care programmes, schools and public utilities and various other public services and such infrastructure improvement projects as the New Providence Road Improvement Programme,” the spokesperson said.

One of the Ministry’s concerns is related to the health of smokers. “The Ministry is seriously concerned about the implications of the import and consumption of counterfeit tobacco. It’s bad enough that cigarettes and cigars contain thousands of harmful chemicals that are proven to be harmful to smokers’ health and those who breathe second-hand smoke. With the use of counterfeit products of unregulated manufacture, they could be ingesting toxins that could seriously injure or even kill,” the spokesperson said.