Eni calls on Lolo administration to enact local cigarette tax stamp law
Congressman Faleomavaega Eni has called on the Lolo Administration and the Fono to take action to combat cigarette smuggling in the territory by enacting a cigarette tax stamp law, which will help prevent the loss of more than $700,000 annually in cigarette tax revenues for the American Samoa Government.
Faleomavaega’s call was made in a recent letter to Gov. Lolo Matalasi Moliga and the Fono leaders, after reintroducing during the current session of Congress, the Stop Tobacco Smuggling in the Territories Bill (H.R. 338).
He explained that the measure, when combined with a territorial cigarette tax stamp program, will add American Samoa to the current federal Contraband Cigarette Trafficking Act, which makes it illegal for merchants to knowingly ship, transport, receive, possess, sell, distribute, or purchase more than 10,000 or more contraband cigarettes that do not have a state or territorial tax stamp.
“Violators of the act will face fines and imprisonment of up to five years. Additionally, the contraband cigarettes will be subject to seizure and forfeiture,” he wrote.
Faleomavaega introduced an identical bill last year and was approved by the U.S. House later in the year. It went to the U.S. Senate where it remained when the last Congressional session ended.
In a news release last November announcing passage of the previous bill as well as the recent letter to Lolo and the Fono, the Congressman cited the Territorial Audit Office (TAO) report in May 2011 which noted ASG losing a significant amount of revenue due to cigarette smuggling.
Later in 2011, a feasibility study commissioned by the American Samoa Community Cancer Network on a Cigarette Tax Stamp Program, estimated that approximately 5.8 million cigarettes were smuggled into American Samoa in 2010, with a loss of revenue of over $724,000 to ASG.
Samoa News had reported on the TAO report, which recommended among other things that ASG put in place a cigarette tax stamp, as well as the study conducted by local consultant Bryan Jackson, who agreed with the TAO recommendation.
When the bill was approved last November by the U.S. House, Samoa News asked Jackson for a reaction to passage of the measure since he was the author the study. Jackson said at the time that while it was great to have the territory included in a provision of this federal law, there is however no cigarette tax stamp in place yet in the territory.
Jackson also said that the federal bill will have no impact on cigarettes smuggled into the territory, unless there is a local cigarette tax stamp in place here.
“The TAO report recommended that ASG implement a cigarette tax stamp program in order to combat cigarette smuggling. To date, the Fono has yet to introduce a bill to address this matter,” said Faleomavaega in the letter to Lolo.
Faleomavaega also informed the governor that even if H.R. 338 becomes part of federal law, “American Samoa would still need to pass a cigarette tax stamp law in order for the federal law to become applicable.”
“Given our current budgetary constraints it is critical that we protect all of our potential revenue sources. American Samoa cannot afford to lose $724,000 per year in tax revenue. I welcome your advice on this important matter,” he concluded.
The federal cigarette smuggling law is enforced by the U.S. Immigration and Customs Border agency.