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Territory still needs cigarette tax stamp says author of study

The author of a local feasibility study regarding a cigarette tax stamp program in American Samoa says federal legislation approved last week by the U.S. House adding the U.S. Pacific territories to the current federal Contraband Cigarette Trafficking Act is not useful to help American Samoa combat cigarette smuggling, primarily due to the lack of a local cigarette stamp program.

Congressman Faleomavaega Eni, who sponsored the measure, announced last Thursday passage of H.R. 5934, known as  Stop Tobacco Smuggling in the Territories Act of 2012. The bill, which is now with the U.S. Senate for consideration, seeks to amend the federal Contraband Cigarette Trafficking Act of 1978 to include American Samoa, the Commonwealth of the Northern Marianas Islands, and Guam.

Samoa News understands that this federal law is enforced by the U.S. Immigration and Customs Border agency.

Faleomavaega cited in his news release announcing passage of the bill a recent study, which states that in 2010 alone, as many as 5,792,924 cigarettes were smuggled into the territory. The study found that tobacco smuggling resulted in a loss of about $724,116 in revenue to the American Samoan government, he said.

The study, commissioned by the American Samoa Community Cancer Network following a May 2011 Territorial Audit Office (TAO) report, was prepared by local consultant Bryan Jackson.

The TAO report found that cigarettes were likely being smuggled into American Samoa, and that as a result ASG was losing a significant amount of cigarette excise tax revenue each year. The TAO report recommended that ASG implement a cigarette tax stamp program in order to control and prevent this smuggling.

Jackson, who agreed to the TAO recommendation, was asked last Friday by Samoa News for his reaction to passage of the federal bill in the U.S. House, since he was the author of the study cited by the congressman.

“My reaction is, that this is great that American Samoa has now been included in this [federal] Act, however, as there is currently no cigarette tax stamp in place in the territory, it is more of a symbolic gesture at this point than anything else, and in reality will have no impact whatsoever on cigarettes smuggled into the territory,” he said.

After reviewing text of the House approved bill, Jackson said over the weekend that this proposed law, “will do nothing to help with the problem of cigarettes smuggled into American Samoa as ASG does not require cigarettes to bear a tax stamp or be marked in any way so as to indicate that the taxes on them have been paid, and the STOP Act — or proposed law —  only applies to the smuggling of cigarettes with such stamps or marks,” he said.

On the other hand, Faleomavaega’s bill could prove to be an additional incentive for ASG to finally put a cigarette tax program in place,” said Jackson, who suggested that ASG could seek assistance from the U.S. Department of Interior’s Technical Assistance Program to help in developing and implementing a tax stamp program.  He said the technical assistance program can—among other things—help improve ‘tax collection systems', “and I believe a cigarette tax stamp program would fall in this category” he noted.