Bill C-47 (Historical)

Excise Act, 2001

An Act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores

Excise Act, 2001

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I listened to my hon. colleague's comments, and as the saying goes we cannot make a silk purse out of a sow's ear. No matter how often we talk about beer, it is not in the bill. However I do want to address some comments that the member made.

What are the concerns of the beer industry? The member did not raise them. They happen to be issues regarding the point of imposition, warehousing, licensing requirements, loss allowances and control on beer exports. What are the facts? Bill C-47 does not deal with the issue of beer and we have already gone through the reasons why it does not. The finance department is reviewing a report on the beer industry with regard to warehousing et cetera.

Excise duty applies to both domestic products and to imports at the same rate. Excise duty does not apply to exports. Canadian small breweries are no less competitive with regard to foreign small breweries when selling in this country.

The government and members on this side of the House are concerned about microbreweries in Canada. That is why the government is looking carefully at this issue. We will not make a change with some magic wand which may turn out to be no improvement at all. We want to ensure we get it right, and we are working in consultation with the industry. That member should know that. If he were that concerned about microbreweries he would want to ensure we get it right the first time. Unfortunately, he seems to have the view that somehow we can go ahead and do something which in fact is not in the bill.

We have already had discussions with the industry and it indicated we were to move ahead with Bill C-47 dealing with the merits of the bill itself, tobacco, spirits and wine.

It has been mentioned many times in the House that this is an administrative bill, and again the Bloc would rather play politics. The Bloc made some odious comments with regard to some linkage between large breweries and the governing party. Shame on that member for raising such nonsense when he knows beer is not in the bill. However he wants to play politics. We want to get it right and do the right thing for microbreweries.

The member across the way is correct, we want a strong microbrewery industry in Canada. I say without hesitation that we will act sooner rather than later. We will do it based on getting the facts right and by responding to specific issues rather than going headstrong off in any direction. We cannot amend something that is not there no matter how often that party wants to say it.

Would the member like to give his views on issues regarding tobacco and smuggling? How does he see the bill addressing the issue regarding small vintners which is of concern to members of that party as well. I wonder if he would like to give his views on how the bill addresses those issues.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Mr. Speaker, I am pleased to speak to Bill C-47, an act to amend the Excise Act and the Excise Tax Act, but I will be a lot less pleased with the result if this bill is ever passed.

It is appropriate to remind those who are listening to us that this bill is aimed at amending the Excise Act and the Excise Tax Act, everything that has to do with wine, spirits, beer, tobacco and distilleries. All this is in the current legislation. The government has decided to modernize the act and make it more functional. We think it is appropriate because it deals with licensing requirements, rights of accession, offences, collection provisions, records, book-keeping and warehousing. All these issues are linked to the management of the excise tax on all of the above.

Unfortunately, something was forgotten in this bill. As if by amazing coincidence, it was decided not to deal with the issue of beer in this bill. How did we get to this point?

In Quebec and in Canada, the microbreweries are going through changes. They are experiencing a great many problems. Many have shut down in recent years. When we seek the causes of this phenomenon, we realize that one of the main ones is that the market in Quebec and in Canada has been invaded by other microbreweries in the U.S., and likely Europe as well.

These countries set out in good faith to tax their microbreweries at a different rate than the big breweries. Canadian beer is taxed at 28 cents a litre, while the United States charges 9 cents. This is obviously a big difference. When the American beer arrives on the Quebec or Canadian market, it is in an advantageous position as far as price goes, particularly since the major Canadian breweries are the ones distributing it on the Canadian market.

So, it becomes more understandable why the major breweries have lobbied heavily, right up to and including influencing the chair of the Standing Committee on Finance, to get her not to include the amendments relating to beer in the bill revising the Excise Tax Act—really now—and revising the entire situation. This is not going to come again anytime soon. The federal government is not going to be dealing with any other amendments to excise tax in the near future.

Why then not take this opportunity to review the entire issue and let our microbreweries enjoy the same advantages as their American and European competition in the Quebec and Canadian markets? The excise tax issue may not be an exciting one, but it does have major impacts.

Let us recall that the present government brags about helping regional and local development. The secretary of state responsible for rural development is currently touring all the major centres of Canada. This seems a bit of a paradox, being responsible for rural development touring around all the major centres to tell people how important rural communities are.

But when it comes to concrete action, when something relevant should be done, something that would help communities develop local beer, for example, and contribute in that way to tourism development, the government drags its feet. Similar markets are being developed for cheese. We can draw a parallel here.

Concerning raw milk cheese, a formidable lobby has tried to pressure the federal government into adopting requirements that apply to industrial cheese. Once again, a lobby group was involved. Right here, in this House, we had to demonstrate that raw milk cheese is something accepted everywhere. Ultimately, we won that case.

Obviously, it is very difficult for the government to admit that its position was influenced by lobby groups. In the medium term, we are bound to win this case, because logic is on our side. We won the raw milk cheese case, and we will also win the case of microbrewery beer.

Most importantly, citizens should understand that the federal government is hiding behind the fact that this bill does not deal with beer, making the amendment out of order. This is completely unacceptable.

This is a complete revision of the legislation. A number of elements should be dealt with right away, and they should be included in the bill, but they have been left out.

When we have had unanimous consent in this place and determined that a problem ought to be remedied, I have seen bills breeze through the three readings in a single day.

Why should we have to debate Bill C-47 today without amending it? Should the government not take the time to send the bill back to committee and, with the consent of all parties, include the beer industry?

The argument they give us, that it is not in the bill, is totally give unacceptable. The government has all the numbers it needs to correct the situation. There is no reason to put it off. It should make a decision rapidly in order to help microbreweries have a reasonable and adequate access to markets in Quebec, Canada and around the world, with the prospect of being sufficiently competitive.

The situation must be corrected. The Bloc Quebecois, of course, talks a lot about microbreweries in Quebec. But there are microbreweries in many other provinces of Canada. There are seven in British Columbia, five in Alberta. There are some in Manitoba, in Nova Scotia. The problem exists and we must tackle it in order to improve the situation in Quebec and in Canada.

The government has not expressed any substantial argument today. Even the last two Liberal members who spoke in support of the bill said: “We must settle the issue of microbreweries, but we do not think that it should be done in this bill”. Will we have to wait for the disappearance of all the microbreweries before talking about it? That is the reality we will have to live with.

Some were tricked in this regard. Unibroue's president said that the Minister of Justice from Quebec, who was then responsible of regional development, supported such an amendment. Where is the Minister of Justice today? Where are the other Liberal members from Quebec, who are not saying one single word in support of an emerging, developing industry that is creating local jobs not requiring very high qualifications. In a village, it can create two, three, five, ten jobs, and allow a microbrewery to operate. This is very interesting, and it could lead to all kinds of spinoffs.

I am very surprised that the federal government could not find anything to say in support of its basic position. Its members simply said, “The legislation does not say a word about beer, so we stick to what we have got”.

The flexibility required to solve such a problem is not there. I find this totally unacceptable and irresponsible on the part of the federal government. In some ways, there is something suspicious, and politically unethical.

As for the way the work was done, if we could go back in time, I think the appropriate scenario would have been that, right at the beginning of the committee's work, the chair should have said: “I cannot chair the committee because of this issue. My husband is a major lobbyist for a big multinational, for a big national brewery, and I cannot take part in this debate. I ask that the chairmanship be given to someone else”.

Thus, we would not be in the mess we are in with the government trying to defend the indefensible, that is, slowly killing Quebec and Canadian microbreweries. There is no reason for this to happen. The only reason is that, in some regards, the other side is governing according to the funding of the Liberal Party of Canada, instead of according to the interests of Quebec and Canada.

If we continue in this direction, we will find ourselves in a situation where, when the studies are completed, when the government will have made its bed on this issue, the final answer will be: “Of course, there is no point in legislating in this regard, there are no microbreweries left”. The way things are going, this is where we are headed.

What should we do to convince the government to change its attitude? Is there not a way for the government, without losing face, to add an amendment to the bill, perhaps in committee of the whole or at third reading; or with the unanimous consent of the House, the bill could be referred back to the committee so that, quickly, it might be amended to adequately protect microbreweries?

What will it take for the government to decide to budge? What will it take for it to recognize that the lobbying that was done by the big national breweries does not adequately reflect the needs of microbreweries?

If microbreweries had said that they liked the bill as it is, that this issue could be dealt with at a later date, that there was plenty of time and we should just wait, then the government would have something to defend its position.

However, there is absolutely nothing to justify the federal government's position today. The current position of the federal government has the effect of systematically reducing, day after day, year after year, the market share of microbreweries.

For the average person, it is hard to grasp why large breweries that currently have 95% or 96% of the market would absolutely want to have the other 4%. The answer is in the profits that these breweries can make.

Apparently, 1% of the market is worth $17 million in gross profits. Therefore, it is certainly in the interest of shareholders of large breweries that the government maintain its current position. Their profits continue to grow. No problem. Things are going well so they will be a little more generous with the Liberal Party of Canada. They consider that the Liberals' way of doing things is the correct one and that they protect them well. It is a big business government more than anything else.

However we are here to determine what is for the common good. In this particular industry, the way to create employment, to ensure that microbreweries have their place on the market in Quebec, in Canada and in the United States and to see the positive impact that these cottage-type operations can have on tourism is to give microbreweries some room to breathe. This is not being done at this time and, in the end, it will just lead to the disappearance of more and more microbreweries.

In my riding, there is a microbrewery that produces Bruegel beer. The brewery was established a few years ago. It is now positioning itself on the market. We can be sure that it could really use the difference between 9¢ and 18¢ a litre. This is what it takes sometimes to get into the market and allow more reasonable profit margins for retailers, bars and restaurants selling the beer and thus develop a local market without threatening the survival of large national breweries in the least.

Even if their market share were 93% or 94% instead of 95%, none of the large breweries will close because of that. That is not what will bring about closure, but it could lead to the creation of more jobs. Large breweries, with their massive and highly automated production, do not create that many jobs, in the end.

However, microbreweries, with their cottage industry style of production, need a certain number of people to operate their production line. It is to our advantage for them to expand. Until now we have not succeeded in convincing the government to remedy the situation.

I think we could call on all the members of the House to check in their ridings and their regions to see if there would not be any microbrewery. Liberal members should consider whether the stand they will take in the vote on this bill is contrary to the needs of their constituents. This might make them realize a few things that could prompt them to knock at the finance minister's door to tell him something like “I think that we could use a little more time to review this. We have all the documents, all the information and all the analysis that we need. Bill C-47 on the excise tax can be amended. Let us correct the situation”.

There are two possible courses of action. If nothing is done, the number of microbreweries could diminish dramatically. In five years, perhaps one, two, three or even four will have survived. The big national breweries will occupy this whole market and may also have bought a few microbreweries just before or after they shut down, to control that market as well. Thus, we will have been instrumental in slowing down the economy in our regions.

Alternately, if we take our responsibilities and act right now, in a few years, in five years perhaps, there will be 100 and some microbreweries in operation across Canada, contributing in a dynamic and interesting way to their communities.

It all depends on the willingness of the Canadian government to make a decision in the interest of the common good rather than that of those who influence the political parties through financing or the roles they can play. There lays the answer.

The Canadian government should go ahead now and address the situation on the basis of our arguments. Let us resume debate where it should be resumed. Let us appoint a committee chair who will be independent, who will not be or seem to be in a conflict of interest and who will see to it that the beer issue is considered and reported on promptly.

I do not think anybody in this House will object to the committee examining only that aspect of Bill C-47. As far as the other ones are concerned, we agree with what is in the bill. We could quickly review the sole issue of beer, include it in Bill C-47, and ultimately achieve the desired results.

Let us not forget that prices are an important factor on the beer market. People who buy a beer for a tasting session may be ready to pay a bit more. However, the difference in price due to the difference in taxes may prevent a microbrewery from selling its product, because its prices will be higher than those of microbreweries in the United States. Often, it is the look of the bottle, the way it is sold or the type of production that make people buy these beers. However, as far as the price elasticity of the product is concerned, one cannot sell a product that contrasts sharply with other products on the same market and with the same types of products.

So the government has a decision to make. I sincerely hope that, for the sake of our regions and our microbreweries, but also because it is an issue of fairness and almost political ethics, the federal government will reconsider its position and amend Bill C-47 and quickly reconsider amendments on beer. We would then feel that we have really done our job properly and that we were not just listening to those who make the most noise because they have the money and are able to influence the government because of it.

This is the challenge I issue to this house and to all members of parliament. I remind hon. members that when they cast their final vote, they will have made a choice, which will bring economic benefits or disadvantages. Also, they will have made a choice based on the rules of conduct we should abide by in this house but, unfortunately, do not always.

[Tony Valeri, Liberal, Stoney Creek, ON]

Mr. Speaker, I appreciate the opportunity to say a few words this afternoon on this excise tax act in front of us, Bill C-47. Sitting in the House and listening to the debate, I have heard a fair bit of discussion about microbreweries, about the competitiveness of microbreweries with respect to our U.S. counterparts, and also about the need for amendment in this piece of legislation so that we can address our concerns for and with the microbreweries. It should be pointed out that Bill C-47 is not an appropriate vehicle for implementing these types of reductions in the excise duty on beer. The bill does not deal with any of the taxation issues for beer.

That being said, though, I think it is fair for members in the House to have this discussion and put forward their perspectives with respect to microbreweries. It is fair to state, and I think it is a statement that all members of parliament would make, that in no way should we as a government or as opposition members or as members of parliament be putting forward taxation policies to try to prevent the growth of industry or industry sectors or of small business. Certainly the objective of being in parliament is to try to assist, to ensure that small businesses continue to prosper, to ensure that in fact those small businesses become larger businesses and that we are able to attract multinationals to this country so we can provide opportunities for young Canadians to stay and continue to contribute.

I wanted to make that point at the outset because I know that the discussion this afternoon really focused on the issue of microbreweries. I personally do not have a problem with what is being said with respect to microbreweries, but I think the emphasis is misplaced. It certainly should not be an emphasis of Bill C-47.

As I am sure members of parliament are aware, and I know that the Parliamentary Secretary to the Minister of Finance mentioned this last Friday, I think it was, when this debate began, it should also be known that Department of Finance officials are in fact reviewing proposals put forward by the beer industry to address concerns. It is not that this issue is not being given any weight. It is not that the government is not aware that there are some issues that need to be addressed with respect to this sector. It is just that Bill C-47 is not the vehicle whereby we can put forward an amendment and deal with it, since it really is a work in progress. There is obviously a commitment that once the analysis and the consultation are completed we can decide whether excise duty and excise tax reductions are warranted.

However, I think the case needs to be made. I am sure that on both sides of the House we will find both support and, I dare say, some opposition to what is being asked for. That is the purpose of having debate. That is the purpose of conducting these consultations. It is the purpose of completing an analysis.

I would suggest to my hon. colleagues across the way that there is an openness on behalf of the government to deal with this issue, but the analysis and the consultations need to be completed. Then we can certainly have that debate, which I would certainly welcome. I look forward to hearing from my colleagues from the Bloc as they put forward their perspective on this. It is one that we need to certainly take note of as this debate continues. Members from both sides of this House certainly have something to say on this issue.

It is also important to note that Bill C-47 is a direct result of a discussion paper on the Excise Act review, which the Department of Finance and CCRA released back in 1997. In coming from 1997 to where we are today, obviously numerous discussions took place with various sectors that were to be affected. It is also important to mention that the beer industry indicated to the government, as I have been told, to continue with Bill C-47 and set aside its own industry perspective for the moment with assurances that we would be dealing with issues pertinent to the beer industry. Therefore the bill went forward and in fact the report has been provided to the finance department and that consultation and analysis are now being completed. That is my understanding.

Hon. members across the way are calling for an amendment because we need to deal with this right away. I do believe that there is an urgency to this matter, but I think it is unfair to say that the matter is not being considered or not being dealt with through the proper channels. Whether or not it is moving fast enough is always an issue for debate and is probably an issue that we will not resolve here today.

With respect to the beer sector, I think it is important to ensure that those points are made. The concerns of the brewers really centre on issues relating to point of imposition, warehousing, licensing requirements, loss allowances and controls on beer exports. These are complicated issues and before any progress in discussions between the government and the brewing industry can be achieved, I think it is fair to say that we need to do the analysis and that further work is required to assess the impact of these proposals. This type of work would not be readily completed within the timeframe originally contemplated by the Excise Act review. I wanted to make those points because we did hear quite often during the debate about the issue surrounding the brewers' association or the brewers themselves.

In recent years, it became quite obvious to both industry and government that the Excise Act, the excise framework, needed to be modernized. That is why the consultations began back in 1997. Industry certainly has introduced new technology, product marketing, and various distribution initiatives that the existing Excise Act was not equipped to accommodate. This is probably an example of where the government machinery was once again trying to catch up to the innovations in the private sector. It is fair to say, as my hon. colleague from across the way said earlier, that there are good aspects to the bill and there are reasons to support this type of legislation.

It is also important when we talk about the competitiveness of sectors and companies to pay attention to the compliance costs associated with that industry. It is certainly fair to say that pervasive controls in the act impose high compliance costs on the industry and impair the competitiveness of Canadian producers. That is the broader issue of dealing with the command and control structures of regulation versus the best practices approach to regulation. The act moves toward improving the issue of competitiveness of Canadian producers.

Given the increase in foreign competition in Canadian markets for beverage and non-beverage alcohol, the government, through consultation, found that the problem needed to be addressed. As I said earlier, Bill C-47 is a result of the discussion paper on the Excise Act review which was released back in 1997. It was in fact out of that review that we found three guiding principles, three goals that essentially guided the configuration of this piece of legislation.

The modern legislative and administrative framework introduced in the bill will generate stable and secure revenues needed to address the contraband pressures that are certainly out there. It was found that this can be achieved without imposing unrealistic or unnecessary costs and administrative burdens on industry. That needs to be the objective of any piece of legislation that comes forward in the House. We must always consider the costs associated with implementing legislation and try to balance the benefits of legislation with costs associated with it when it comes to issues like excise tax.

This piece of legislation certainly seems to strike that type of balance, whereby we do not in fact impose unrealistic and unnecessary costs or administrative burdens. It also helps to address the ongoing concern over the smuggling and illegal production of alcohol. The intent is to certainly ensure that the spirits industry, to name one, is no longer hindered by outdated or onerous controls over premises and equipment and that with these controls removed businesses will have the greater flexibility they require to organize their commercial affairs to respond more quickly to market changes. We all know that in an increasingly globalized economy those pressures to change certainly come faster, companies themselves must have flexibility and government should not encumber that type of flexibility through regulatory burden.

If I can just speak for one moment with respect to distillers, there is certainly an issue that I want to get on record. I want to take the opportunity to thank the Parliamentary Secretary to the Minister of Finance who helped resolve this issue with respect to the concerns of distillers. Now I urge the government to follow through on the commitment and proceed as agreed so that we do not in any way encumber this sector through regulation.

My hon. colleagues have talked about small business and the importance of supporting small business. With respect to vintners, it is also important to mention that the bill does in fact deal with the fact that all vintners must be licensed. It also stipulates that those with sales under $50,000 in the previous 12 months do and will continue to qualify for the small manufacturer's tax exemption. Therefore, for a very small vintner's operation the bill does in fact maintain that exemption.

The bill is really an administrative bill. I think it is important to emphasize that. It is not a bill dealing with tax measures. It is important to mention that the bill does introduce modern collection tools to help address the government's ongoing concerns regarding a number of issues, certainly one of them being the smuggling of alcohol. It certainly enables CCRA to improve its level of service to clients and its overall administration of the excise framework for both alcohol and tobacco.

To go back to that whole debate about regulatory burden, I certainly believe that in today's era of innovation and an innovation agenda, it is incumbent on the government to ensure that the regulatory burden, the making of regulations, is an important part of that innovation agenda. We really need to be able to create a framework whereby our companies are able to innovate, not to be regulated from a command and control perspective but rather one whereby they are able to innovate from a best practices or an evidence based approach to meet standards and requirements that we as a country and certainly as a government would have.

Bill C-47 would move toward reducing the regulatory burden and compliance costs. It is important to mention that. It is also important to mention that under the bill CCRA would improve its overall administration and level of service to its clients.

To sum up, the new excise framework would ensure excise duties on alcohol and tobacco were collected in a more effective and efficient manner, something we always strive for. It would provide for an array of modern administrative and enforcement tools which are important to ensure compliance with the new act.

The new framework for the taxation of spirits, wine and tobacco products would provide greater flexibility for businesses to respond to the challenge of organizing their commercial affairs. This goes back to the pressures companies feel in promoting and creating new markets and the pressures they feel due to globalization and the competitive nature of the industry.

Bill C-47 would provide for enhanced protection of excise revenues. It would provide for improved administration and lower compliance costs. Again, this goes back to the whole regulatory issue. The bill would provide for a more simple and certain taxation structure, something we should all be striving for not only in excise taxes but in personal and corporate tax. I am sure that going forward there will be many an opportunity to debate the issue with members of the House.

I have addressed a number of issues I wanted to put on record with respect to the administrative nature of the legislation. I made the point about brewers because the issue is important. I do not for one moment want to leave Canadians with the impression that brewers would not be dealt with or considered in the larger context of their issues. From 1997 to today there has been an engagement with the brewers who felt their issues could not be dealt with in the timeframe that was set out.

A proposal has been put forward with respect to the sector. The finance department is looking at the issues outlined in the proposal and will provide the analysis. We can then have a debate and discussion about how we might best deal with the issues put forward by the brewers.

[Keith Martin, Canadian Alliance, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, I thank you and I thank my colleague from the Bloc Quebecois for his generosity.

It is a pleasure to speak to Bill C-47, an act respecting the taxation of spirits, wine and tobacco. I would like to draw the House's attention to a few bits of misinformation that we have heard in the House today from the government.

Back in 1994 the government was faced with a large problem of tobacco smuggling which was taking place primarily in Ontario and Quebec. At that time the government decided to lower the rate of taxation on cigarettes to address the smuggling issue. That created a huge problem.

Against the advice of the Department of Health and of stakeholders, the government lowered taxation rates which resulted in 225,000 Canadians taking up smoking, particularly teens in the young age group. We know that those people who take up cigarette smoking are primarily in their teenage years or even younger. It took the government some six years to change that mistake by bringing taxation rates up. Unfortunately every year 250,000 new Canadians took up smoking and this will have a devastating effect on all of us.

We know that the biggest thing we could do to decrease the chance of teenagers smoking is to keep the costs high. This is called price elasticity of demand. This means that as the price of cigarettes is increased, it creates a dramatic reduction in consumption, particularly among kids. This dramatic reduction is not only in the number of cigarettes they smoke, but also the age at which they start to smoke. In other words, the more costly it is, the older they are, the less they smoke. The cheaper it is, the younger they are, the more they smoke. Reducing the tax is probably the single most destructive act in public health care policy that we have seen in more than 30 years. We will pay the price in the future.

I compliment the government for increasing the tax rates and harmonizing them across the country. This will do much to decrease cigarette smuggling between the United States and Canada. Cigarettes were going from Canada to the United States and then resold back in Canada. People could make a profit because the price difference between the two countries was so dramatic.

This issue does not address the much larger issue of smuggling in general. Tobacco was just one of the products being sold at that time. We know that smuggling rings were organized crime rings working between the United States and Canada. Yes, they were buying and selling cigarettes but they were also buying and selling weapons, alcohol and drugs and involved in human smuggling.

A massive amount of smuggling is going on north and south, right under the noses of police who have been told not to interfere, in part because a lot of this takes place on aboriginal reserves crossing the boundaries of both countries. It is a serious jurisdictional problem. Many law-abiding aboriginal people living on these reserves are seriously harmed by this situation. The police are unable to intervene because they are understandably scared of an Oka-like crisis.

I ask the government to look at the larger issue of smuggling taking place in these areas. The government has control over the smuggling of tobacco, and it should be complimented for that. It is a good move on the part of the government, not only from a judicial perspective but also from a public health care perspective. For heaven's sake, the government must look at the larger issue of the smuggling of guns, drugs, alcohol and people.

The way to deal with that is not only to enforce the law, but to also implement what are called Rico-like amendments. The United States Rico amendments refer to racketeering, influence, corruption, organization charges. These laws enable law enforcement officers to go after organized crime gangs in a way they have not been able to before.

Good things happen when we can go after the financial struts and pillars that help support organized crime gangs. If the government wants to do one that is very effective, it should implement Rico-like amendments similar to those in the United States and at the same time ask other countries to implement them as well.

If we could do that on a transnational basis, then organized crime gangs would have a very difficult time doing their work that parasitizes so many in our country.

The second issue is alcohol. My province of British Columbia, as in many other provinces, has a large number of microbreweries and vintners, winemakers. Their biggest problem is the barriers that exist is exporting those wines east-west. It should be noted that the barriers east-west are greater than those north-south.

Vintners in my province can sell fairly easily to people in the United States. However it is very difficult for those individuals living in Ontario, Manitoba or Nova Scotia to buy British Columbian wines. A hodgepodge of rules, regulations and obstructions exist for the export of that wine east-west.

I would encourage the government to do something for a product that, in moderation, is good for the health of people, and that is the drinking of red wine and other wines. It would do wonders for the health of Canadians and also for those vintners who produce some of the finest wines in the world.

I would encourage the government to work and listen to the vintners and to remove those east-west barriers to trade. Canadians would then be able to purchase Canadian wines no matter where they lived. This would do much to support these products which are really a Canadian success story. I also suggest removing and lowering the tax rates not only for vintners, but for small businesses as well. My party has pushed for that for a long time.

My colleague from the Liberals mentioned that they wanted to do something for small businesses. If they truly want to do something, then they can lower the tax rates and remove the egregious rules and regulations that choke off the ability of small business to compete. They can also remove the export tax restrictions so they can compete fairly with other countries.

The other thing the government should do is flatten out the tax system and remove the corporate and personal tax structures.

My colleague across the way suggested that we pursue this through private members' business. As we know, 239 private members' bills have been put forth by members from all parties. Absolutely none of them reached committee stage. None from the government ranks have been made votable, which is terrible.

We need to do many things. If the hon. member from the other side truly thinks we should use private members' business to implement some of the fine solutions that have been put forth in the House, then we need to reform private members' business so that every member in the House, regardless of what party they represent, will have one votable private member's bill per parliament and one votable private member's motion.

If we could do that, and we can, then members of the House could have constructive discourse over important issues to Canadians and to our country. There are so few avenues where we can do that. We cannot do that by and large in the House or committees because these venues are primarily talk shops for areas of intellectual interest. They have no real effect on public policy.

I think all members know that there will be a round table on private members' business this week. Members from across party lines will come to it with good ideas. Collectively we can force the government to adopt those good suggestions. By doing that, private members' business would work for the betterment of everybody and ideas such as the ones put forth on this issue today could be employed. This affects all of us.

In closing, we support the bill. I compliment the government for equalizing taxation on tobacco across the country and for raising the tax levels which will do much to decrease smoking, particularly among children.

I would encourage the government not to back down when it hears pleas from the tobacco companies asking for lower taxes. Whatever the government does, it should not lower taxes on cigarettes. If it does, more children will pick up cigarette smoking at a younger age. It would be a devastating public health policy.

[John Bryden, Liberal, Ancaster—Dundas—Flamborough—Aldershot, ON]

Mr. Speaker, again I think the problem is that this is not the bill that will deal with the problem. It is a tax problem. However this is a parliament that is dealing with the problem. We have heard some comments about parliament being dysfunctional and not working. I can suggest to all members that this is when parliament is working, when members bring forward an urgent issue.

I just regret that the issue got deflected on the chairman of the finance committee. I do not think that is where the issue really is. The issue is that there is a quality of life problem, a small business problem, and we all share the desire to help small business.

We have raised the issue and the message is clear for the government. Regardless of what happens to Bill C-47, the government needs to move very quickly on this issue. Maybe a private member's bill is the way to go if we can make it votable.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I was very pleased to hear the comments of my hon. colleague. He clearly has read the bill but I would like him to respond to something.

The Bloc members continue to make comments about Bill C-47 in that they want to see the reduction of excise duty on beer. The bill does not deal with the taxation of beer. In fact it does not deal with the substantive rate issues for any products.

The member across the aisle has made a lot of comments about beer. The member knows that first reading on the bill was in December 2001 so clearly there was no conflict of interest by the chair since she did not become chair until February.

I would ask the member to comment on the fact that the Department of Finance is currently reviewing the analysis with regard to proposals put forth by the beer industry and by the wine and cider industry as well, which I know is of interest to members across the aisle from Quebec. What does the member think of this approach in terms of looking at it specifically, since the government was faced with the situation where the industry asked that beer not be put into the bill so that we could analyze it separately, deal with the issue and then move forward?

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I listened carefully to my colleague's speech on Bill C-47. I thought he did a very good job. He should give courses to the secretary of state and the parliamentary secretaries, because they do not often read the bills. He even read part of the bill to us. That was most interesting.

I would simply like to clarify one point and then ask him a question. A distinction must be made between microbreweries and make your own breweries. What the member was talking about earlier were make your own breweries, which allow certain wines to be reproduced, just as some make your own wineries allow certain Beaujolais and so forth to be reproduced, but on a limited scale.

When we talk about microbreweries, we are talking about a production in the neighbourhood of 300,000 hectolitres a year. They are still sizable breweries. They are not brew your own establishments. They produce original beers in Quebec, Ontario and Alberta. Some of these original beers increase diversity in the market and create opportunities for segmentation, while meeting consumers' needs for diversification.

I am sure that the member also has a desire to help the industry, particularly the microbreweries. Since he seems very open-minded and favourable to the microbreweries, and since he recognizes the great diversity and product diversification, especially when it comes to wine, spirits and beer, is he prepared to support a proposal to reduce the excise tax for microbreweries, which is often six times higher than that imposed on American microbreweries?

In asking him this question, I would like to remind him that American microbreweries are making inroads on the Canadian market with this competitive tax advantage. The major problem facing Canadian microbrewers then becomes not being able to compete with this almost unfair competition from the American breweries.

I would also like to remind him, before he gives us his support for reducing the excise tax, that the major Canadian breweries, John Labatt and Molson, have distribution contracts with the American breweries.

It cannot be argued that John Labatt and Molson are defending Canadian microbrewers and, at the same time, taking advantage of the microbreweries' market by selling products from outside Canada. Would the member be prepared to restore justice for Canadian microbrewers?

[John Bryden, Liberal, Ancaster—Dundas—Flamborough—Aldershot, ON]

Mr. Speaker, we have heard a lot about the beer that is not in the bill. I would like to talk a little bit about the wine that is.

One of the purposes of second reading debate is to examine legislation in detail to try to find flaws or make observations about it and bring the contents of the bill before the House. I certainly acknowledge that there has been some very passionate feelings about microbreweries and the fact that beer is not included in the legislation. I wanted to tell the member opposite that there is no reference to beer, but it is true that beer was defined so it would appear that there was an intention at one time to include beer in the legislation. I will come back to that a little further along.

One of the things that really interests me about the bill and I should point out to Canadians at large is that while it does not deal with brewing our own beer, it certainly does deal with the growing industry in Canada involved in making our own wine. This is a phenomenon that got its start, at least in Ontario, in the mid-1980s, basically taking advantage of some loopholes in legislation that existed.

In my own community, several of these little shops developed, first I should say, to brew their own beer and then started developing make your own wine on the premises operations. This was an enormous opportunity for Canadians, at least in Ontario. I acknowledge that in Quebec, because of the French heritage of my Quebec colleagues, there is a far greater sensitivity to wine than there ever has been in English speaking Canada, at least up until the time bottle your own wine businesses developed in the 1980s and then spread. They started as make your own beer, but just looking at the small shop fronts in my own riding, beer is now taking second place to make your own wine.

These are wonderful opportunities because we can do it all on the premises. We can get various grape concentrates from some of the famous vineyards in France. We can also get them from Canada. We can make a Merlot, Chablis, or a Bordeaux and many other types of wine. It is interesting because this started out almost as a cottage industry. As I say, it piggybacked on the brew your own beer.

I was looking at some Statistics Canada figures. It is very difficult to find out because I tried very hard all day to get some idea of how large a sector of the market make your own wine is and I was unable to do so. But looking at some Statistics Canada figures from 1980, it is very, very interesting because starting in 1970 we see an overall decline in spirits consumption. That is all kinds of other alcohol. We see a sort of dip and then a rise in beer and then a flattening out. Parallel to that flattening out is a sudden sharp rise in wine consumption and wine sales.

I would suggest that what is happening there, again possibly mostly in English speaking Canada, is the result of so many Canadians being able to go to a little shop in their community and instead of making beer, they make their own wine. They make it for about a third of the price of a brand wine. Actually, a lot less than that sometimes. It has introduced them to the entire experience of wine drinking.

I would suggest that after a certain length of time making our own wine at these shops we begin to develop a taste for better wine, because the reality is that in these places where we bottle our own wine and ferment our own product, it really does come out as different grades of plonk. After a little while, those of us who struggle along and can finally afford a good bottle really appreciate it. I would suspect that the increase in popularity of make your own wine stores has had a very good effect on all kinds of wine sales in Canada.

That brings me to Bill C-47 because it regularizes the actual production of wine in these establishments. As I was saying earlier, a lot of this was done basically as a result of loopholes in legislation, and mostly provincial legislation. Here we have the government, at long last in my view, attempting to formally regulate the make your own wine establishments and set some rules.

I draw attention to some of the clauses. In section 62, and there are a number of subsections, the bill would make it legal to produce wine and package it for one's own personal use. There are various other aspects of it. It also covers the possession of wine. One has to possess wine for one's own use.

It sets rules for the establishments themselves. If they are holding wine in bulk then they would not be breaking the law. Up until this legislation, or at this moment I would suggest, it is an entirely grey area as to what is happening on those premises. The bill would attempt to give it some system or regulation. I think it will be a benefit to everyone.

However, there are clauses that are kind of interesting and need to be dealt with by the standing committee that will be looking at the legislation after it passes second reading. Clause 63, for example, states:

No person shall sell or put to a commercial use wine that was produced, or produced and packaged, by an individual for their personal use.

I can see a problem here because a lot of charities and non-profit organizations, and perish the thought, even political fundraisers, rely heavily on trying to bring in beverages that are cost effective, shall we say. This clause has to be looked at.

There is provincial legislation that already applies here with respect to spirits on premises for fundraising events but this particular section in Bill C-47 would appear to forbid a charity from using wine made at a make your own wine store as part of a fundraising effort. I would say that should be revisited because the reality of it is that commercial wine, the wine that comes under label for the most part, is much too expensive to be a beverage at a fundraiser. That indeed is one of the reasons that many fundraisers, if they are to have an alcoholic beverage at all, choose beer. I think we have to look at section 63.

There is a similar section, section 64, about the packaging of wine, that it has to be packaged only on their own behalf. That of course raises questions about packaging make your own wine as gifts. Again, I think we have to look at that.

Then there are some other peculiarities. I found one section that was quite amusing. It is wonderful to prowl through a bill, and I suggest to Canadians that they should get onto the Internet when they see bills like this appearing in parliament and do exactly as backbench MPs are supposed to do, and look through it and make their own inferences. There is quite an interesting section, section 2, on the definition of wine. I found that fascinating because we are talking about make your own wine.

In section 2 wine is defined, among other things, as a beverage of normal alcohol content but it is also defined as a beverage that is not fortified in excess of 22.9%. Well, Mr. Speaker, that is some wine.

What the bill basically does, and this might be something else the committee might look at or other people who have some strong thoughts about alcohol consumption in general, is it makes it permissible to make our own sherry and port. It is quite bold because it suggests that we can fortify it. Quite apart from all the sections about the regulating and the denaturing of alcohol, alcohol that is not denatured can obviously be applied in this bill to make our own sherry, which I find somewhat amusing. These are positive aspects of the bill.

I think we need to debate this because one nice thing about making our own wine is that it is very much an ordinary person thing. This is what Canadians have been doing. I think the rise of brew your own beer or make your own wine establishments has been a very positive thing.

In that context I would like to allude to the fact that the bill does not deal with the brew your own beer. I have great sympathy for the complaints from the opposition on this. I am a great fan of the microbreweries in Quebec. I have had the happy occasion to visit St-Jean-sur-Richelieu. There are about five microbreweries in that area and they are all excellent.

However I suspect that the government may have run into a problem that is quite different than the problem that is perceived by the opposition involving the major breweries. I think that problem may be the fact that, at least in Ontario, every brew your own beer franchise is a microbrewery. The difficulty is that in Ontario we can go to these establishments, get a recipe to make an English beer, a wheat beer or a German beer. We can duplicate just about every imaginable beer that can be bought under label from a store. I suspect that one of the problems is how to manage the difference between this type of microbrewery and the type of microbrewery that exists in Quebec.

I will say that I would absolutely support trying to find a way in which to ensure that the microbreweries, not just in Quebec but elsewhere, are retained. I would say in passing that it is not quite the same thing with wine because the beer produced in these brew your own stores is a very close imitation of the very best beer we can buy anywhere, including in the microbreweries, whereas at the make your own wine establishments the best wine we can make will never match a French, Canadian or Australian label.

However, the bill is not just about wine and spirits. I would like to also draw the attention of the House to the fact that the bill also deals with tobacco. I think that is very important because in the early part of the 1990s this country experienced a very severe problem with respect to tobacco smuggling. In my view, a lot of it was the government's fault in the sense that the federal government, the predecessor government to the Liberals if I may say so, elevated taxes on tobacco to such a level that contraband taken from across the border from the United States became very profitable.

I well remember in 1995, I had only been up here two years, that we had a crisis basically along the St. Lawrence Seaway where organized crime and other interests were importing not just hundreds of millions of dollars but a billion dollars worth of tobacco products from the United States. The statistics from that period are quite shocking. The government in the end had to lower taxes and, to a large degree, that addressed the problem.

What remained was the fact that a lot of the tobacco products that were being smuggled in from the United States during that particular period were actually made in Canada.

We had a situation where tobacco products, as it later emerged in investigations in the United States and in our own investigations here in Canada, that enterprises were producing tobacco in Canada and then shipping it to the United States both in an unfinished fashion and as cigarettes. These products were then being smuggled across the border back into Canada. It was a billion dollar industry and none of that money went to government. There were no taxes. It was a very severe problem.

One of the interesting statistics was that in 1993, just to give members an idea, 18 billion finished cigarettes were being exported from Canada to the United States. Whereas four years earlier it was only 4 billion cigarettes. In other words, the contraband market in Canadian cigarettes increased enormously.

What Bill C-47 does, and I think it is a very positive thing, is it introduces some severe penalties with respect to the illicit manufacture and distribution of tobacco products.

I draw the House's attention to clause 214 which provides that if somebody is convicted of manufacturing and selling cigarettes without government authorization, without going through the proper channels, which would include smuggling, the fines on conviction range from $50,000 to $1 million and imprisonment for a term of not more than five years. That is a heavy penalty and I think we all should be pleased to see it there. The one thing we do not want to do is go back to that period when tobacco smuggling was a major industry and, I regret to say, a major industry on our border Indian reserves. I think Canada came to a very near point of lawlessness along our borders as a result.

The key regulations that these penalties apply to are clauses 25, 26 and 29 which basically say that no person, other than a licensee, shall manufacture a tobacco product, and no person shall carry on the activity as a tobacco dealer without the appropriate licence, and so on. I suggest that this is a very positive step forward.

It is good technical legislation. I am very pleased to see that it has sort of addressed the problem of tobacco smuggling in a very substantive way. It has addressed the problem of the illegal manufacture of cigarettes. Cigarettes have been with us for a number of centuries and we are not going to stop people smoking. We might stop a lot of people smoking but it is an addictive product and a lot of people will continue to do so, just as they will continue to drink alcohol.

It is very important that we have the regulations and the legislation in place that administers these two product which do not always do the best for us but two products that people insist they will live with. If I may say so, I could certainly do without tobacco but I think wine and the microbreweries are certainly worth saving.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I thank the member for Châteauguay for his question. I think we have to realize--and he gave further evidence of this--that we have here a bill that has been cut to benefit private interests at the expense of the microbrewery sector.

The government should not try to make us believe anything else. The member for Châteauguay just gave us further evidence. At the outset, Bill C-47 was designed to amend the existing act, which includes the beer industry. I have no doubt whatsoever in that regard. During the process, specifically at the brewers' request, it was decided to exclude this sector. What I cannot understand is that at the same time, we are told--and the Brewers Association of Canada itself acknowledges this--that the situation is urgent. Still, the association is requesting that the decision be postponed.

I would like to remind the House that there are facts. For each 24 bottle case of beer produced in Canada by microbreweries, the federal government collects $4.09 when it is sold in a grocery store. When it is sold in a bar, however, the government collects $6.12. If it were sold in the United States, the tax would be $1.12 and $4.09. This is almost a plot designed to close down the microbreweries.

If this is what the federal government wants, it should say so and let us debate the issue. Why does it want the microbreweries to disappear? The government might think that the large companies like Labatt and Molson are part of the campaign for national unity, just like the Canadian dollar and the early railroads.

I can see no objective reason for not including the beer industry and the debate on the reduction of the excise tax for the microbreweries. There is none, except maybe for financial reasons that escape me.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, it is an honour to take the floor to debate Bill C-47.

This is a rather special bill in that the debate involves not only an issue affecting the Excise Tax Act, but also an issue of ethics. The exchange of views we have just had strikes me as very clear in this respect. I will therefore need to speak to both of these aspects.

On Friday, the member for Saint-Hyacinthe--Bagot pointed out, and rightly so, that it is strange, to say the least, that we are being presented with Bill C-47, which covers everything but beer and the excise tax on microbreweries.

This is a general bill, and one that is well explained in the presentation, where it is stated that it re-enacts existing provisions in the Excise Act and the Excise Tax Act relating to the excise levies on these products, together with technical improvements, and incorporates a range of new provisions.

This is, therefore, a re-enactment of existing legislation. In the present legislation, everything is addressed: wine, spirits, beer, tobacco. There are provisions on licensing, rights of accession, offences, collection, record. In this bill, everything is there except for beer and excise tax on microbreweries. This is passing strange.

Why? There are two reasons, as has been pointed out by the members of the Bloc Quebecois since the start of this debate, I believe, and by a number of opposition members as well. First, because the government has torpedoed the work of the committee, and second because it preferred to lend an ear to the major breweries rather than the needs of the microbreweries.

When they listen to the major breweries, which must unfortunately be identified as Labatt, Molson and the like, the corporate image of these companies is greatly tarnished in the process. Personally, I find this regrettable, because these are well-established institutions. They have put themselves in the position of being in conflict of interest and this, I feel, will not go over well with the general public.

Let us review the facts regarding breweries, and microbreweries in particular. Across the board in Canada, as is the case in the United States, there is a 28 cent tax per litre of beer. However, in the U.S., the mecca of capitalism, as the member for Saint-Hyacinthe--Bagot reminded us again on Friday, there is a distinction made for microbreweries. The tax is not 28 cents a litre, but nine cents a litre. In the U.S., a microbrewery is defined as a brewery that produces a maximum of one million hectolitres. In Canada, a microbrewery is defined as a brewery producing a maximum of 300,000 hectolitres.

This means that what would be considered a large brewery here is considered a microbrewery in the United States. They are three times the size of our microbreweries, yet they are considered microbreweries and benefit from a preferential tax rate of nine cents per litre of beer, rather than 28 cents per litre.

The result of this situation is clear. Since their taxes are lower, they are able to compete with, and really hurt their Canadian competitors. We have witnessed the result: 38 microbreweries have disappeared. They have not disappeared by some miracle; they disappeared because the circumstances of competition led them to disappear.

Why? There are no doubt a number of factors, but there is one that is easily identified. The 28 cents per litre paid by Canadian microbreweries and the nine cents per litre paid by U.S. microbreweries is definitely one of the main reasons.

If the Government of Canada has at heart the interests and the future of its microbreweries, it should react swiftly by accepting to review Bill C-47, to immediately include the beer industry, particularly the excise tax on beer produced by microbreweries.

Europe has done the same thing. This would not be some Canadian invention. We would be falling in line with what is done everywhere else. There are rules—I say this as the Bloc Quebecois critic on international trade—accepted by the World Trade Organization. When it comes to microbreweries, they are considered in terms of regional diversification, and the member for Jonquière reminded us earlier, in terms of diversification of products.

There are also cultural aspects to the production of these microbreweries, which are often still using traditional methods.

The Government of Canada dismissed out of hand the concerns of the microbreweries and decided simply to listen to the interests of the big breweries, in particular Labatt and Molson, which dominate the Brewers Association of Canada.

I conclude that there is some sort of collusion between what it was decided to include in Bill C-47 and the interests which are not hidden, but admitted. We have the letter. I have seen it. Clearly, the Brewers Association of Canada is asking that anything having to do with the beer industry and the excise tax for microbreweries be excluded from Bill C-47.

So this entire situation is of great concern, all the more so since—and this brings me to the second point—while the member for Saint-Hyacinthe--Bagot tried to correct matters so that Bill C-47 would include the provisions of the earlier legislation amended to reflect the current state of affairs, the committee's work was sabotaged by the fact that the amendments to include the beer provisions were rejected.

Earlier, someone said, “Yes, but it was not in the bill”. A bill is just as important for what it includes as for what it leaves out. It seems to me that we are entirely justified in including beer in a discussion of excise taxes on wine, spirits and tobacco. The public would normally group these products together.

In my view, this argument is completely wrong. It is exactly the same as for bills before the sub-committee or the Standing Committee on Foreign Affairs and International Trade. Each time amendments to crown corporations concerning international trade or foreign affairs are put forward, I always put forward an amendment, but this amendment or this concern is never included in government bills.

I will give an example involving the Export Development Corporation. When it was decided to rename it Export Development Canada, there was a key omission. There was no provision requiring a crown corporation, such as the Export Development Corporation, now Export Development Canada, to respect Canada's international commitments. I put forward an amendment in committee. That amendment was accepted. It was not in the bill.

On the contrary, every time we talk about crown corporations, the government systematically excludes this. We have international commitments. Canada tries to be generous, but only if it is of no practical consequence. Every time it is not in the legislation. Every time I put forward amendments, they were ruled in order by the chair and every time they were defeated by the Liberals. However, I managed to do one thing at least--and I say it every time I have an opportunity to do so--to prove that this government speaks from both sides of it mouth.

This is another case in point. Do not give us this misleading argument that we are not dealing with beer. The current act deals with beer. They should have explained to us why we should not be talking about beer. Everybody agrees, including the Brewers Association of Canada, that the situation of the microbreweries is urgent. Why then is the only sector identified as being threatened by competition the one for which no decision is being made? It is being postponed, put off for a month of Sundays. In the meantime, microbreweries are disappearing one after the other. They have lost another 1% to 2% of the market.

Moreover, the committee chair, the member for London West, used a new procedure introduced during this Parliament with Motion No. 2, which in my view is particularly undemocratic. I remind the House that the government put forward Motion No. 2 after the debate on Bill C-20, which attempted and is still attempting to prevent Quebecers from democratically choosing their collective future. It will not work but this is what the Liberal government attempted to do. There is also the Young Offenders Act which the Bloc Quebecois, and especially my friend the member for Berthier—Montcalm, tried to stand up for the Quebec consensus on this bill.

We moved amendments to correct the bill. To deal with the problem, the Liberals changed the rules of the game. The chair of a committee or sub-committee may now simply decide that an amendment is out of order. This is what happened in the case of the amendment moved by my friend, the hon. member for Saint-Hyacinthe--Bagot.

Democracy is ailing in the Canadian parliament. No wonder Canadians and Quebecers are losing confidence in their parliamentary institutions. Decisions are not taken here but in the Prime Minister's office. This is where it was decided that beer would not be part of Bill C-47. It is the duty of the opposition and it should also be the duty of the members across the way to say, “Bill C-47 should have dealt with the beer industry, especially microbreweries”.

Therefore I cannot accept the argument, which is being constantly repeated, namely that since Bill C-47 did not deal with the beer industry, the amendment had to be out of order. This is totally ludicrous.

Unfortunately, this is what occurred. I will not mention the fact that the spouse of the chair of the committee is a lobbyist for the Brewers Association of Canada. This is probably just a coincidence. The facts, however, are real. This is the truth. I believe that if she were a minister, the committee chair would probably be a very good candidate for a position as ambassador in a Scandinavian country.

It seems to me that if the government were committed to the future of the 2,000 employees of microbreweries who earn their livelihood in this sector, mainly in Quebec--I remind hon. members that proportionally Quebec has more microbreweries than the rest of Canada--and elsewhere in Canada, it would immediately bring forward amendments to Bill C-47 dealing with the beer industry and the excise tax as it relates to microbreweries, which everyone considers necessary.

I remind hon. members that even the Brewers Association of Canada has said so. Allow me to read the letter sent on April 12, 2002 to the chair of the committee and spouse of a lobbyist for the brewers association:

Our position remains unchanged: we fully support a reduction in the excise tax for small brewers. It is a priority of the BAC and we want to point out that small brewers in Canada urgently need such reduction.We will support any measure aimed at attaining this objective, but in light of our prior agreement with the government, we cannot support amendments which would include beer in Bill C-47.

On the one hand, the association says that it is prepared to support any measure to settle a situation that it itself deems urgent, but, on the other hand, it did everything it could to prevent the Bloc Quebecois from moving amendments that would have corrected the situation. This is a rather serious case of manipulation of the public interests.

If the government cared about the future of these 2,000 employees, it would correct the situation. I believe the opposition would unanimously agree to include this clause in Bill C-47.

Unfortunately, this government, perhaps because it has been in office for a number of years, no longer cares about Canadian and Quebec workers. We can see it in the Murdochville and GM cases. I could list all the issues on which the federal government shown indifference. This government only cares about one thing: remaining in office, ensuring that the Liberal Party of Canada has enough money to win the next general election. This is its only concern.

There has been an incredible deterioration. I have witnessed it myself, because I followed politics for a number of years before I entered it, in November 2000. The government is no longer protecting the interests of the federal government, of Canadian federalism. It is protecting the partisan interests of the Liberal Party of Canada. If this means that microbreweries must disappear, then they will disappear for this government, for the party in office, but not for us.

We are going to fight to ensure that what has happened to GM and Murdochville does not happen to the 46 microbreweries left in Canada, 19 of which are located in Quebec. The government will have to wake up and review Bill C-47 to include the beer industry and the excise tax for microbreweries, or this will be yet another example of the federal government's failed economic policies.

Just for fun the other day, even though there was actually nothing very funny about it, I decided to make a list of all the federal government's failed economic policies since Confederation.

The national policy artificially created an east-west market. It deprived Quebec of its natural axis, which is north-south. Fortunately, free trade set things straight and we do more business with the Americans than we do with the rest of Canada.

The Borden line made Quebec and eastern Canada pay more for gasoline than we would have paid if prices had been in line with international prices. And why was that? To develop the oil industry in western Canada. It was a completely respectable choice. How strange that Quebec always has to pay for these policies.

Now, for the St. Lawrence seaway. Certainly it had to be constructed but what compensation was there for Quebec, Montreal in particular, southwest Montreal, east Montreal, when the seaway was built and industry moved to southern Ontario? This is perhaps just another coincidence and probably not premeditated in any way.

There was no question of not putting in the St. Lawrence seaway. There should, however, have been investment in restructuring, in worker retraining, in order to avoid the catastrophe that ensued, in the late 1970s and early 1980s in particular. Fortunately, people were able to pick up the pieces. Things are better in Montreal now, without any help from the federal government.

The federal government's R & D policy systematically penalizes Quebec. It took a 30 year struggle to get back occupational training—and we do not yet have it all back—in order to have a consistent employment policy. That took 30 years. We lost 30 years in federal-provincial squabbles. In the end, the federal government had to bow to the pressure and acknowledge it was wrong. Nevertheless, we wasted 30 years. Quebec wasted 30 years on this battle.

As for GM, federal government policies have systematically favoured development of the auto industry in southern Ontario. However, when it comes to industries with a solid foothold in Quebec, aeronautics or pharmaceuticals for instance, we see that federal government policies favour a shotgun approach, spreading them all over, in all regions of Canada.

I will give one example from my own experience. When Quebec obtained the space agency for Saint-Hubert, immediately afterward the federal government awarded the F-18 maintenance contract to Winnipeg, just to be sure that the goodies were spread around. This, however, can weaken the situation of the aircraft industry in Quebec. The same thing goes for the pharmaceutical industry.

With a record like that, it seems to me that we now have an opportunity presented to us, a symbolic one of course. Yet with this government, I believe we need to start with something symbolic before moving on to something more serious.

Honestly, the government ought to rethink its intention to push Bill C-47 through regardless. It should redo its homework. We are prepared to be involved, as the member for Saint-Hyacinthe--Bagot has said right from the start. The law needs changing, needs modernizing, but there must be equity with all sectors.

I am not promoting wine, spirits and tobacco over beer. I think they should all be treated equally. That is what the Bloc Quebecois is asking for. If Bill C-47 does not meet our expectations, then we will have to fight against it and do everything we can to defeat it.

I will also fight for the microbreweries in the region of Lanaudière, especially one in Joliette, La Broue Pub, l'Alchimiste. It was set up by young entrepreneurs a few years ago and I want this young business to have the opportunity to compete on the North American market and, who knows, maybe even on the world market. But for that to happen, we need to take fairer measures, decrease the excise tax on microbreweries and amend Bill C-47. Otherwise, we will defeat it.

The federal government now has the chance to show that it cares about microbreweries, regional development, especially in Quebec, and more globally the 2,000 people working in this industry across Canada.

[Mac Harb, Liberal, Ottawa Centre, ON]

Mr. Speaker, as I pointed out earlier, but I think my colleague was not listening, this particular topic was not covered in the bill. Committee chairs do not make laws. My colleague needs a lesson on how things work with regard to bills.

Usually, a bill comes before a committee on the initiative of the ministers responsible. The chair or members of the committee are not involved in the drafting of the bill.

My colleague is not making a positive contribution to this debate. We are here to debate Bill C-47. Frankly, I expected the members to talk about this bill, but they rise and talk about all sorts of things that have nothing to do with the bill. The member talked about microbreweries in his neighbourhood and in his region. But does he have concrete proposals to make about what this House or a future House could do to deal with these issues? Does he have concrete proposals to make about what can be done? Does he have any ideas?

We must deal with the issues before us. A committee chair does not introduce a bill. It is the result of a concerted effort by the industry, the public and the public administration. It does not emanate from a committee chair.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, our colleague does not seem to know what is in the Excise Act. It contains everything we have in Bill C-47, amending the general excise legislation, except one thing, beer.

Why is that? Because the Brewers Association of Canada, through the chairman of its taxation committee, who happens to be the spouse of the chair of the Standing Committee on Finance, asked her not to include in the bill the beer produced by microbreweries. That is why beer is not included.

In 1986, Justice Parker, who presided over the case of a Conservative minister who was accused of 14 counts of conflict of interest, said that we needed a stronger and legally enforceable code of conduct if we were to prevent public office holders from ending up in this kind of situation. One of his key recommendations involved an examination of the position, assets and economic interests of spouses and dependent children. In this case, it is not a neighbour who is involved, but the spouse.

You did not answer the question of the hon. member for Joliette. As chair of the committee--

[Mac Harb, Liberal, Ottawa Centre, ON]

Mr. Speaker, first, as regards responsibilities, when a committee is reviewing a bill, the first administrative duty of the chair is to examine the issues before it. The committee was reviewing Bill C-47. Therefore, the first and last responsibility of the chair was to examine the issues relating to Bill C-47.

When an opposition or government member proposes a motion on any topic, the chair's responsibility is to take that motion or suggestion and refer it to the clerk of the committee.

This is precisely what the chair did in this case. The clerk of the committee said that this topic was not covered in Bill C-47. Therefore, the chair agreed that the committee would not look into it. I do not see how we could say that this puts the chair in a conflict of interest position. As we say, this is a slippery slope.

If we start saying that a member of parliament is responsible for what his spouse, mother, father, brother, cousin or any other relative or neighbour does, it will never end.

We need to realize that, for some time now, integrity issues have been important not only for government members, but also for opposition members. When issues like that are raised, they have to be based on clear objectives and a just foundation.

In this case, however, our colleagues are raising an issue that is devoid of any substance. These are very personal issues that reflect badly not only on my colleague, but on the House of Commons and on all Canadians.

We are to blame if the public does not trust us, because we are responsible for what is being broadcast over the speakers in the House of Commons. We are somehow responsible for casting a negative light upon our Canadian parliamentary institutions. All because the opposition parties are making unsubstantiated allegations.

I challenge the hon. member to make these same allegations outside the House of Commons and see what the Canadian courts make of them. If the member can prove these allegations in any way, shape or form, he should make them outside the House of Commons.

This bill addresses all the topics, except for the breweries. The hon. member should stand up and apologize to my hon. colleague from London West.

[Mac Harb, Liberal, Ottawa Centre, ON]

Mr. Speaker, I would like to take this opportunity to first pay tribute to the chair of the finance committee, the member for London West, a person with integrity, a commitment to public office, an understanding of the issues and an unequivocal sincerity and who has been putting in endless hours, days, months and years trying to serve her constituents and the people who have elected her. To hear some of my colleagues trying to remotely question the appearance, or the lack of, or whatever they are trying to put before the House, I find totally unacceptable and it certainly does not represent the views of anyone outside of the one or two members who have raised this question.

I also would like to pay tribute to my colleague, the Parliamentary Secretary to the Minister of Finance, the member for Oak Ridges, for his hard work on this legislation and his diligence, as well as his commitment to ensure that Canadian laws are meeting the objectives that they were set out for. I also would like to congratulate him for being so open to consultation, suggestions and ideas, and I also want to commend him for the way he has carried the bill through the committee and through all the different processes that bills have to go through.

Just for the record, so that my colleague will realize that she and my colleague from the Bloc Quebecois who asked the question were wrong when they made the statement that microbreweries are in fact part of the bill, the reality of it is that the bill does not make any mention in any way, shape or form of microbreweries or nanobreweries. In fact, they are simply not part of the bill. What this legislation does is look at the overall federal framework for taxation of alcohol and tobacco products. It tries to bring that up to date and to put in place a mechanism that reflects the reality of the day. As well, it tries to address some of the issues that need to be addressed.

Specifically, I want to quote from the bill some of the things that the legislation deals with. First, one of the key features of this legislation deals with:

(a) the continued imposition of a production levy on spirits, tobacco products and raw leaf tobacco and the replacement of the existing excise levy on sales of wine with a production levy at an equivalent rate;--

In this part of the bill there is absolutely no mention whatsoever of microbreweries or breweries in general.

The second aspect of it deals with:

(b) the replacement of the excise duty and excise tax on tobacco products other than cigars with a single excise duty;--

at the equivalent of the existing combined rate. Here again there is absolutely no mention of breweries, micro or otherwise.

The third aspect of this legislation deals with:

(c) the introduction of excise warehouses to allow for the deferral of the payment of the production levy on domestic and imported spirits and wine to the time of sale to the retailer;--

Once again there is absolutely no mention of brewers in this section of the legislation.

Another section of the legislation deals with:

(d) more comprehensive licensing requirements and new registration requirements for persons carrying on activities in relation to goods subject to duty;--

There is absolutely no mention of breweries in this section.

The legislation also deals with:

(e) explicit recognition of limited exemptions for certain goods produced by individuals for their personal use;--

There is absolutely no mention in this section of breweries.

A section of the legislation deals with introducing:

(f) tight new controls on the possession and distribution of goods on which duties have not been paid;--

Once again, for my colleagues from the Bloc, there is absolutely no mention in this section of the legislation of anything to do with breweries, micro or otherwise.

The legislation also contains:

(g) modern provisions concerning the use of spirits and wine for non-beverage purposes and the use of specially denatured alcohol;--

Again, in this section of Bill C-47 there is absolutely no mention whatsoever of breweries, micro or otherwise. Also in this legislation there are provisions in order to ensure:

(h) updated administrative provisions, including new remittance, assessment and appeal provisions that are similar to those under the Goods and Services Tax/Harmonized Sales Tax legislation;--

Again microbreweries are not mentioned in this section of the legislation. Also there are elements that deal with:

(i) updated enforcement provisions, including new offence, penalty and collection provisions;--

Again, in this section of Bill C-47 there is no mention of breweries, micro or otherwise.

There are other provisions included in this legislation, such as the following:

the replacement of the existing provisions in the Excise Act and the Excise Tax Act relating to the excise levies on spirits, wine and tobacco necessitates consequential amendments to those Acts as well as other acts, including the Budget Implementation Act, 2000, the Canada Customs and Revenue Agency Act, the Criminal Code...the Customs Tariff, the Export Act, the Importation of Intoxicating Liquors Act, the Special Economic Measures Act and the Tax Court of Canada Act.

The legislation states:

This enactment also implements changes to the ships' stores provisions, which were announced by the government on September 27, 2001. These changes broaden the enabling legislation for ships' stores regulations and implement a temporary fuel tax rebate program for certain ships that, as a result of the amendments to the Ships' Stores Regulations effective June 1, 2002, will no longer qualify for ships' stores relief.

In addition:

...this enactment implements the tobacco tax increases announced by the government on November 1, 2001.

All these comments are to state to the House, for the record and for Canadians who are watching or who have watched over the past few days the incredibly unfounded allegations of my colleagues in the Bloc, that the breweries are not included in the legislation. Therefore, the attack on the chair is unwarranted and unnecessary. Frankly, it is high time for my colleagues to stand and apologize to the member for London West for the undue stress they imposed on the member, who is incredibly sincere and has an incredible level of intelligence and commitment to serve her constituency.

The legislation would do two things. It would create a provision which would ensure that the laws of Canada are enforced in a manner that is up to par with other legislation in Canada. At the same time, the legislation would create a provision for people growing tobacco or making wine in their homes and would give them the ability to use that tobacco, alcohol or wine for their own personal use without being penalized by the law. As well the legislation would bring some of the other legislation into line so that the government can continue to fulfil its commitment to the people in the industry who are trying to produce products and create jobs, therefore responding to the needs of Canadians.

Some of my colleagues might wonder whether the bill would harm in any way, shape or form those who are in different sectors. Let us take for example the people who work in the tobacco sector. There are in excess of 1,200 tobacco producers across Ontario creating over 17,000 jobs. Bill C-47 would not affect them in any way, shape or form. It would not touch them.

The legislation would not affect people in the wine and spirit producing sectors in a negative way per se. Rather, it would deal with the issue of people who operate without licences and try to sell their product on the market without proper certification. The element of enforcement exists in the legislation for that purpose.

We cannot look at Bill C-47 in isolation. It is part of the government's overall agenda of revisiting every law on the books to ensure our laws continue to respond to the needs of Canadians. When the Prime Minister was elected in 1993 one of the pledges he made to the House and to Canadians was that we would look at the way we do our job as a government. He said we would look at our mandate which is to respond to the needs of Canadians.

As we have seen, the government has done just that. First, we addressed the incredible amount of debt and deficit that existed when we came to power. It was at an all time high of over $42 billion. In no time at all the government was able to turn the corner and bring us into a surplus situation that has enabled us to not only pay down the debt but to support the programs Canadians feel strongly about such as health care, education and other issues that affect them.

Bill C-47 is part of the overall government agenda of trying to bring our laws into the 21st century so our industries can do well. My colleagues in the opposition consistently attack the government about where we are on the international scene. I have in my hand a report published in January, 2002 by KPMG, a well respected international organization. The report deals with competitiveness on the international scene. The report is available to my colleagues on the opposition side. It is my hope they will obtain a copy of it and have a look at what the government has done over the years. I will not read through it but according to KPMG Canada has been identified as the best country in the world in which to do business. Canada is way ahead of the United States, the United Kingdom and many other countries in the industrialized world. We continue to strive in that area.

I will read for hon. members what it says about an area in which Canada has been the pride of all Canadians: labour costs and taxation. Canada is still one of the best countries in the world in terms of taxation. I will come to that in a minute.

My colleagues on the other side often quiz the government on the issue of competitiveness and labour costs. Hon. members will be happy to know that when it comes to wages and salaries, statutory plans and employer sponsored benefits Canada ranks first. That is ahead of the United Kingdom, the Netherlands, Italy, Germany, France, Austria, the United States and Japan.

I will come back to the issue of taxation and what we are talking about in the bill. When it comes to levels of corporate taxation Canada has been ranked a close second to the United Kingdom but well ahead of all other G-7 countries.

This is all to say that what we have seen from the government over the past nine years is an unequivocal commitment to respond to the need of Canadians and ensure Canada continues to be the best country in the world in which to live and do business. Bill C-47 fits exactly into the government's agenda and where we are going.

I sometimes see my colleagues on the other side taking cheap shots at the chair of the finance committee or the parliamentary secretary. We have seen reports in the press over the past few days indicating 70% of Canadians do not have trust in their elected officials. It is my duty and obligation as a member of parliament to stand and say it is these kinds of unfounded allegations that are eroding the trust of the public in public institutions.

When members of this institution attack the integrity of other members we start to see an erosion of public confidence in our institutions. It is the responsibility of each member of this institution to stand and be counted. We must state the facts, not use innuendos or unfounded allegations. Members must not make comments if at the end of the day they cannot walk outside the House and make the same comments. Such members know they will be sued if they do because their statements are totally false and without foundation. Members of the House must be in a shameful state of mind to stand and attack the integrity of other members without proper foundation, without any legs to stand on, without any brain to guide them and without any soul to go back to.

In that spirit I want the House to know Bill C-47 has nothing to do with breweries. If there is a social or a business problem with the issue of breweries it is our responsibility as parliamentarians to address it in the context of something else, not in the context of what is before us and the House today. To turn around and make an allegation about the chair of the committee puts her in an awkward position. If the issue is not in the bill and she or the clerk have ruled that the issue cannot be dealt with by the committee, it puts the committee chair in a conflict.

What a shameful and baseless allegation. It is my hope that the same member who stood to attack the member will stand right now, as my colleague would say, and apologize not only to the member but to all Canadians because Bill C-47 is supported by the industry. It is supported by the people. It is supported by the same institution the hon. member is trying to protect. He is doing no service whatsoever to his constituents by making these kinds of unfounded allegations.

It is my hope that the House will approve Bill C-47 without any delay.

[Jocelyne Girard-Bujold, Bloc, Jonquière, QC]

He is the Parliamentary Secretary to the Minister of Finance.

Personally, I have always been very honest and I will not allow this individual to question my honesty or the honesty of the hon. member for Saint-Hyacinthe--Bagot.

Initially, in 1997, when it was decided to review the Excise Tax Act, the beer sector was part of the review. However, following a letter of the Brewers Association of Canada asking the chair of the Standing Finance Committee not to include beer, this is precisely what happened. I am not imagining things. This is the truth. If there is another truth it is not part of Bill C-47. Beer was supposed to be covered by Bill C-47 but it is not.

The parliamentary secretary should go back to square one and tell the government to include beer in Bill C-47. This would satisfy us and allow us to hold a dispassionate debate.