Finance Committee on May 1st, 2014

[Scott Brison, Liberal, Kings—Hants, NS]

Following on Mr. Keddy's question on taxation on tobacco, in the past, high tobacco taxes contributed to a significant growth in the underground market for cigarettes. When the government announced these measures in budget 2014, they also announced money to fight contraband tobacco. Page 237 of budget 2014 shows that there will be $45 million spent to fight contraband tobacco over the next two years.

How much of the $45 million is new money, and if it's not new money, what was the original purpose of the funds? How much money is coming from existing RCMP budgets?

[Gervais Coulombe]

Thank you again for the question.

These kinds of spending questions unfortunately fall outside my area of expertise as we are responsible for the enactment of the Excise Act of 2001, the legislative amendments that make it possible to have the duty increase in place. However, my understanding is that a similar question was addressed in the previous briefing. We could surely follow up internally with our parliamentary staffers to ensure that the appropriate response is provided. I do not have with me any details in terms of what that $91.7 million over five years or the other profile over two years of funding to the RCMP that you were referring to.

[Scott Brison, Liberal, Kings—Hants, NS]

Remember to get back to us in a timely manner. Earlier in the week would be helpful, given the timing of this.

The concern is that if the money is actually coming from the existing RCMP budget, the RCMP have faced significant cuts, $195 million to its actual budget. The Auditor General is already concerned that the RCMP cannot meet existing obligations without new funding.

So setting aside say $20 million per year while $195 million per year is getting cut doesn't necessarily help the RCMP meet additional responsibilities that could result from the unintended but highly likely consequence of a growth of an underground market for cigarettes as a result of these taxes.

That's it for part 3.

[The Chair, Conservative, James Rajotte]

That's it for part 3. Okay. Thank you.

Thank you, Mr. Coulombe.

I'll just ask colleagues, does anyone have any questions on part 4, customs tariff?

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

I just have one question.

[The Chair, Conservative, James Rajotte]

One question...? Okay. We'll ask the two officials to come forward.

We have Mr. Halley.

We also have with us Mr. Tousignant. Welcome.

Thank you for being with us here today.

We'll go to Mr. Keddy first then please.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Mr. Chairman. I started this question earlier, but it was in the wrong spot of the discussion.

The elimination of the 20% most favoured nation rate of duty on mobile drilling rigs at a time when there was a scarcity of oil rigs worldwide should assist more offshore drilling for gas and oil in Canada, without question. But the link is to small business and the supply of those oil rigs.

Do we have any hard numbers or any theoretical numbers even, on how much assistance this will give to small business, specifically in the service industry?

[Patrick Halley, Chief, Trade and Tariff Policy, Department of Finance]

Sure. As the budget mentioned, this measure lowers business costs for offshore exploration by about $13 million annually. There are also spinoff benefits. The industry has indicated that over the last four years in Canadian shipyards, there was repair work or maintenance work done on these rigs when they came into Canadian waters.

That's about $40 million a year, on average.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Okay.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much.

Mr. Brison, please.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you, Mr. Chair.

The one area I'm interested in here is the tariff classification of certain imported food products. I understand that the measure in clauses 91 and 92 is in response to certain pizza products.

Could you explain this to us?

[Patrick Halley]

Sure. Clauses 91 and 92 clarify the tariff classification of certain food products that contain cheese, a product that falls under the supply management system for certain agricultural products and that is subject to high duty levels. The clarification addresses a gap whereby certain imported goods were packaged in a deliberate manner solely to circumvent the current tariff structure, which has, as I said, very high supply management tariffs on mozzarella cheese, which is part of that food product. The tariff is 245.5%.

So clauses 91 and 92 clarify how these products, or how the components of these products, should be classified—i.e., the cheese should be classified as cheese—under the appropriate tariff item.

[Scott Brison, Liberal, Kings—Hants, NS]

Were the measures related to any court disputes?

[Patrick Halley]

Well, it's an issue that was brought to our attention. This was circumventing the import controls pillar, and the clarification addresses that gap with respect to ensuring the integrity of the import controls pillar of the supply management system.

[Scott Brison, Liberal, Kings—Hants, NS]

What's the expected fiscal impact of clauses 91 and 92?

[Patrick Halley]

There's no impact. This is solely a clarification to essentially clarify how these products should be classified. Essentially a loophole was found in the way the tariff structure was originally drafted. This only clarifies how these products should be classified.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

That's all.

Okay. I want to thank our officials for being with us on part 4.

We have part 5 next. I know that there are a number of questions on it from a number of members, so I'll ask those three officials to come forward.

Colleagues, we have less than an hour left. I'm presuming this might take up the rest of the time today. Am I safe in presuming that?

[Some hon. members]

Yes.

[The Chair, Conservative, James Rajotte]

On your behalf, then, can I release from the committee today the officials for part 6 and ask them to come back on Tuesday? Is that a fair thing?

Mr. Rankin.

[Murray Rankin, NDP, Victoria, BC]

Would it make sense, Mr. Chair, to have the officials for the first part of part 6 available, and nothing else, in the event that we don't use all the time on FATCA?

[The Chair, Conservative, James Rajotte]

So we'll keep the first four divisions for now and see how the time goes?

[Murray Rankin, NDP, Victoria, BC]

That would be good.

[The Chair, Conservative, James Rajotte]

All right.

Is that fair? Is that good? Okay.

I just want to be as fair as possible to the officials in the room.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

You're a fair chair.