Customs and Excise Amendment Bill (No 3)

  • enacted

Commentary

Recommendation

The Foreign Affairs, Defence and Trade Committee has examined the Customs and Excise Amendment Bill (No 3) and recommends that it be passed with the amendments shown.

Introduction

The bill makes a number of amendments to the Customs and Excise Act 1996 to enhance the statutory appeal and review rights in relation to the forfeiture and seizure regime contained in the Act, to provide more flexibility for Customs to deal with ad hoc arrivals and departures, and to give Customs better control over illegal tobacco manufacturing operations. A particular issue of interest to us in the examination of this bill was the personal use exemption on the growth and manufacture of tobacco.

Personal use exemptions on tobacco

The majority of us recommend that new clause 6A be inserted in the bill. This new clause would bring an exemption, which allowed the manufacture of tobacco leaf into products that can be smoked, from delegated legislation into primary legislation.

Under the current regime for the control and manufacture of tobacco it is illegal to manufacture tobacco products outside of a licensed Customs Controlled Area. The only exception to this requirement is a “personal use” exemption, which allows the manufacture of tobacco leaf into products that can be smoked. It was envisaged in this bill that this exemption would be contained in delegated legislation.

The majority of us believe that this new clause is necessary, as this bill proposes to increase the maximum penalties relating to offences around the manufacture, movement, and storage of tobacco from fines to a fine or term of imprisonment.

The majority of us strongly support the principle that all offences, and their related exemptions, punishable by a term of imprisonment should be contained in primary legislation rather than delegated legislation. It is fundamental that individuals faced with possible imprisonment for breaching the law have the certainty of primary legislation. The flexibility and speed with which delegated legislation can be amended could create an uncertainty that is undesirable.

The majority of us note that in bringing the exemption for tobacco into primary legislation we will have created an anomaly in leaving a similar exemption for alcohol in delegated legislation. The majority of us therefore urge the House to consider correcting this anomaly by bringing all exemptions envisaged by this bill relating to offences punishable by imprisonment into primary legislation.

Further, this exemption sets a limit on the amount of tobacco a person may cultivate under the personal use exemption. The committee discussed this limit at length. The majority of us believe that 15 kilograms is a realistically enforceable figure, which would allow the Customs Service to control the growth and manufacture of tobacco in New Zealand effectively. This limit and scheme is based on the Canadian personal use exemption figure.

The majority of us also recommend a number of consequential amendments to the bill to reflect the changes in new clause 6A.

Labour Party minority view

The Labour Party members believe that the bill as introduced provided for stronger regulation making powers in the Act as one of a set of measures for better control of illegal tobacco manufacture. The conditions under which people could manufacture tobacco products for their personal use without being subject to Customs controls would be set out in regulations. The ability to create “personal use” exemptions by regulation gives flexibility and allows for relatively quick changes if exemptions are being missed. It would also be consistent with other exemptions from Customs controls (e.g. for home-brew of beer) which are created by regulations.

The option of putting the “personal use” exemption for tobacco into the Act itself, rather than in regulations, reduces flexibility in the ability to control the black-market illegal tobacco trade and is inconsistent with similar control arrangements. Such a mechanism might need to be revisited.

Green Party minority view

The Green Party member opposed writing into the legislation a limit of 15 kilograms for the personal use exemption as evidence received suggested that such a high limit was not appropriate.

Minor amendments

We recommend a number of minor and consequential amendments to the bill.

As clause 15 authorises the requirements for outward reports to be prescribed by rules, we propose inserting a new clause 14(1) to remove the same topic from the regulation-making power in the Act.

We recommend that new clause 18A be inserted into the bill to take account of the transitional arrangements necessary for the first year of the use of the legislation.

Appendix

Committee process

The Customs and Excise Amendment Bill (No 3) was referred to the committee on 11 December 2007. The closing date for submissions was 18 February 2008. We received and heard one submission from an interested group.

We received advice from the New Zealand Customs Service.

Committee membership

Martin Gallagher (Chairperson)

Dr Wayne Mapp (Deputy Chairperson)

Taito Phillip Field

Tim Groser

John Hayes

Keith Locke

Hon Murray McCully

Jill Pettis (from 1 April 2008)

H V Ross Robertson

Dianne Yates (until 29 March 2008)