[Congressional Record Volume 158, Number 145 (Wednesday, November 14, 2012)]
[House]
[Pages H6355-H6357]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STOP TOBACCO SMUGGLING IN THE TERRITORIES ACT OF 2012
Mr. COBLE. Mr. Speaker, I move to suspend the rules and pass the bill
(H.R. 5934) to amend title 18, United States Code, to include certain
territories and possessions of the United States in the definition of
State for the purposes of chapter 114, relating to trafficking in
contraband cigarettes and smokeless tobacco.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 5934
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Stop Tobacco Smuggling in
the Territories Act of 2012''.
SEC. 2. TERRITORIES AND POSSESSIONS OF THE UNITED STATES
INCLUDED IN THE DEFINITION OF STATE FOR THE
PURPOSES OF THE PROHIBITION AGAINST TRAFFICKING
IN CONTRABAND CIGARETTES AND SMOKELESS TOBACCO.
Paragraph (4) of section 2341 of title 18, United States
Code, is amended by striking ``or the Virgin Islands'' and
inserting ``the Virgin Islands, American Samoa, the
Commonwealth of the Northern Mariana Islands, or Guam''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
North Carolina (Mr. Coble) and the gentleman from Virginia (Mr. Scott)
each will control 20 minutes.
The Chair recognizes the gentleman from North Carolina.
General Leave
Mr. COBLE. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days within which to revise and extend their remarks
and include extraneous materials on H.R. 5934 currently under
consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from North Carolina?
There was no objection.
Mr. COBLE. Mr. Speaker, I yield myself such time as I may consume.
H.R. 5934, the Stop Tobacco Smuggling in the Territories Act of 2012,
was introduced by Mr. Faleomavaega, my good friend from American
Samoa--and I apologize if I did damage to that. I thank him for his
work on this issue.
Cigarette trafficking is one of the most lucrative smuggling
operations in the United States and around the world. It is estimated
that illicit cigarettes account for over 10 percent of the more than
5.7 trillion cigarettes sold globally each year.
Here in the United States, approximately 4 billion cigarettes sold
each year are illicit. Cigarette smuggling is typically carried out by
sophisticated,
[[Page H6356]]
large-scale criminal organizations that take advantage of the
significant disparity between the taxes levied on cigarettes across the
States. For example, Mr. Speaker, a pack of cigarettes that costs $13
in a high-tax State like New York will cost only about $5 in a low-tax
State such as Virginia.
These differences create a highly lucrative market for individuals to
evade the local sales tax and purchase cigarettes in one locality and
transport them to another for resale below the market value. Criminal
organizations are able to make a profit of as much as $1 million on
just a single truckload of illicit cigarettes.
State cigarette taxes in the United States have been on the rise
since 1992 and have increased more than 65 percent over this period;
however, the States' gross tax revenues have increased by only 35
percent due in significant part to the illicit tobacco trade.
Exploiting the price disparity for a single pack of cigarettes
between individual States has proved profitable for criminal networks.
According to the Justice Department, this illicit activity costs the
States and the Federal Government approximately $5 billion each year.
This is money that could--and should--be put to better use.
Congress took steps to curb the sale of contraband cigarettes with
the Prevent All Cigarette Trafficking (PACT) Act of 2009. The PACT Act
prohibits the sale of cigarettes and smokeless tobacco products over
the Internet, and it made changes to the criminal anti-cigarette
smuggling statutes.
H.R. 5934, Mr. Speaker, provides a technical correction to ensure
that the criminal prohibitions against cigarette smuggling apply to the
U.S. territories of American Samoa, Guam, and the Northern Mariana
Islands in the same way that they do for the rest of the country. This
is a modest but important change that will help to promote safety and
tax revenues in these territories.
I again thank my friend from American Samoa for his work on this
issue, and I urge my colleagues to join me and Mr. Scott in support of
this bill.
I reserve the balance of my time.
Mr. SCOTT of Virginia. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in support of H.R. 5934, the Stop Tobacco
Smuggling in the Territories Act of 2012.
When enacted, H.R. 5934 will amend the Contraband Cigarette
Trafficking Act by including American Samoa, the Commonwealth of the
Northern Mariana Islands, and Guam in existing legislation which makes
it illegal to knowingly ship, transport, receive, possess, sell,
distribute, or purchase 10,000 or more contraband cigarettes that do
not have a State or territorial stamp.
Under the Contraband Cigarette Trafficking Act, violators face
criminal penalties and fines. Currently, there are no such sanctions in
effect for violations that occur in the territories, thus prohibiting
the Bureau of Alcohol, Tobacco, Firearms and Explosives from
investigating cigarette smuggling and Trafficking Act violations. H.R.
5934 will fix this.
{time} 1310
Mr. Speaker, each year hundreds of millions of cigarettes are
diverted from legal trade channels into the underworld. Cigarette
counterfeiting is growing steadily. Cigarettes are believed to be the
most illegally trafficked product in the world.
Cigarette smuggling results in significant economic impact in terms
of depriving governments of excise tax revenue and depriving legitimate
businesses from income due to unfair competition. Smuggling of genuine
cigarettes steals as much as an estimated $40- to $50 billion from
governments in tax revenue, with trafficking in counterfeit cigarettes
stealing even billions more.
In May 2011, a report from the Territorial Audit Office on collection
of cigarette tax by the American Samoa Government found that cigarettes
are likely being smuggled into American Samoa and that, as a result,
their government is losing a significant amount of cigarette excise tax
revenue.
A subsequent study estimated that as many as close to 6 million
cigarettes had been smuggled into the territory in 2010, resulting in
an estimated loss of revenue to the American Samoa Government of over
$700,000.
In addition to the economic impact, there are public health and
public safety concerns. Smuggling delivers cigarettes that are cheaper
to buy. Because cheaper cigarettes lure youth and other new customers,
they boost sales and consumption, making it harder for smokers to quit.
It's also been reported that some import imitation cigarettes have
been found to contain toxins. As a result, illegal trade adds steadily
to healthcare costs, worker productivity losses, and the growing death
toll from tobacco use, already almost over 5 million lives per year,
projected to rise to 8 million by 2030.
From a public health standpoint, it is well documented that, as with
other contraband, proceeds from cigarette trafficking support organized
crime and even terrorist networks.
For these reasons, I support the bill. I encourage my colleagues to
support the bill as well.
If the gentleman has no other speakers, I'd like to yield to the
gentleman from American Samoa (Mr. Faleomavaega) for such time as he
may consume.
Mr. COBLE. I have no additional speakers. I reserve the balance of my
time.
(Mr. FALEOMAVAEGA asked and was given permission to revise and extend
his remarks.)
Mr. FALEOMAVAEGA. Mr. Speaker, again I cannot express enough my
deepest appreciation to the gentleman from Virginia (Mr. Scott) and my
good friend, the gentleman from North Carolina (Mr. Coble) for their
management of this bill.
Mr. Speaker, I rise today in strong support of H.R. 5934, a bill that
I authored to stop tobacco smuggling in the territories.
First, I want to thank the chairman of the House Judiciary Committee,
Mr. Smith, and my dear friend, the ranking member, Mr. Conyers, and all
the members of the committee for their strong support of this
legislation.
I also want to acknowledge Speaker John Boehner and House Majority
Leader Cantor, and our Democratic leader, Nancy Pelosi, for their
support of this bill.
I thank my colleagues, the gentlelady from Guam, and also, the
gentleman from the Northern Mariana Islands, Ms. Bordallo and Mr.
Sablan, respectively, for their cosponsorship of this bill.
Mr. Speaker, today American Samoa faces a serious problem of tobacco
smuggling, as I'm sure it's the same with the other territories.
According to a recent study, 2 years ago, as many as 5,792,924
cigarettes were smuggled into the territory. The study found that
tobacco smuggling resulted in the loss of about $724,116 in revenues to
the American Samoa Government.
If continued undeterred, tobacco smuggling in the territory will lead
to heavier losses in local tax revenues, especially if cigarette excise
tax rates were to be increased.
Mr. Speaker, in this age of government fiscal responsibility,
securing and sustaining stable resources of local revenue stream is
essential and must be encouraged for the territories. It was for this
reason I began to look into this important issue. And I was
disappointed, however, to find that, under current law prohibiting
cigarette smuggling, not all the territories were included.
Under the Contraband Cigarette Trafficking Act that Congress passed
in 1978, it is illegal to ship, sell, transport, or possess more than
10,000 cigarettes, or 500 packs per month, not bearing the tax stamp of
the jurisdiction in which they are found. Violation is a felony
punishable by up to 5 years in prison and seizure of the contraband
cigarettes.
The Contraband Cigarette Trafficking Act currently, however, does not
apply to American Samoa, Guam, and the Northern Mariana Islands.
Historically, when Congress considered the bill in 1978 the Senate
version defined State to include the 50 States, the District of
Columbia, Puerto Rico, or a territory or a possession of the United
States, while the House provision excluded the smaller territories. For
some reason unbeknown to me, the conference substitute adopted the
House provision, and according to the conference report, the House
provision
[[Page H6357]]
is described as ``more accurately delineating the practical scope of
the legislation.''
Mr. Speaker, the bill before us today will correct this oversight in
the current law. This important piece of legislation will amend the
Contraband Cigarette Trafficking Act to include the territories of
American Samoa, Guam, and the Northern Mariana Islands. It will amend
the definition of a State for the purpose of this Act to include all
U.S. territories.
Again, I commend my good friends, the gentleman from North Carolina,
as well as my friend from Virginia, for their extensive understanding
and knowledge of this issue and the matter now before us. I urge my
colleagues to support this bill.
Mr. SCOTT of Virginia. Mr. Speaker, I yield myself such time as I may
consume to thank the gentleman from American Samoa, the leadership of
the Judiciary Committee, and my friend from North Carolina (Mr. Coble)
for bringing this measure to the floor. I urge my colleagues to support
the bill.
I yield back the balance of my time.
Mr. COBLE. In closing, I want to thank Mr. Scott as well, and my good
friend from American Samoa. Eni, I apologize for my having fractured
the pronunciation of your name earlier. But folks, this is a good bill
that addresses a formidable threat, and I urge my colleagues to vote in
favor of the bill and support it.
I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from North Carolina (Mr. Coble) that the House suspend the
rules and pass the bill, H.R. 5934.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill was passed.
A motion to reconsider was laid on the table.
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