Tobacco Tax Overview

Tax and Revenue Administration (TRA), Alberta Finance and Enterprise, administers the Tobacco Tax Act, which legislates the collection of tax on tobacco (see "Background" below). The Tobacco Tax Act requires all wholesalers and importers to be licensed to sell or import tobacco for resale.

Retailers are required to purchase all tobacco from licensed wholesalers or importers. All cigarettes and fine cut tobacco intended for tax-paid sale in Alberta must be marked with the Alberta tear strip or stamp. Those permitted to mark tobacco must purchase the tear tape from Alberta licensed tear tape producers.

Retailers cannot sell Alberta-marked cigarettes and fine cut tobacco exempt from tax. Black stock tobacco and tobacco not required to be marked (such as snuff, cigars etc.) are the only products that can legally be sold tax-exempt by registered Alberta Indian Tax Exemption (AITE) retailers to eligible Alberta Indians or Indian bands (see the Alberta Indian Tax Exemption (AITE) series of information circulars) or by duty-free shops to persons leaving Canada. The term "black stock" refers to those packages of cigarettes and loose tobacco products that have a peach tear tape rather than the Alberta tear strip.

The Tobacco Tax Act and its Regulation make provision for:

• collection of tobacco tax;
• administration of the tobacco tax exemption under the AITE program, including the payment of refunds under the program; and
• refunds of tobacco tax to wholesalers on uncollectible debt or to retailers on tobacco that has been destroyed or stolen.

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Background

Alberta tobacco tax is applied to all tobacco products: cigarettes, tobacco sticks, cigars, cigarillos, pipe, water pipe, raw leaf and loose tobacco, snuff and chewing tobacco purchased in Alberta. Most of the tax is collected from sales of cigarettes taxed at 18.5 cents per cigarette, effective 12:01 a.m. April 20, 2007.

The 2007-08 tobacco tax revenue is expected to be $890 million. This revenue goes into general revenues to help pay for all provincial services including healthcare.

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