Thank you, Mr. Chair.
The Government of Canada applies an excise duty to all tobacco products sold in the Canadian market. The tobacco excise duty rates are currently set to automatically increase every five years to account for inflation. Under this approach, tobacco excise duty rates would be adjusted on December 1, 2019. Budget 2018 proposed to advance the existing inflationary adjustments for tobacco excise duty rates to occur on an annual basis rather than every five years. To ensure consistency in the excise framework, inflationary adjustments will take effect on April 1 of every year, starting in 2019.
Effective February 28, 2018, the day after the budget, tobacco excise duty rates were adjusted to account for inflation since the last inflationary adjustment that was made in 2014. That first adjustment was equivalent to an increase of about $1.29 per carton of 200 cigarettes.
The budget also proposed to increase excise duty rate by an additional $1 per carton of 200 cigarettes, along with corresponding increases to the excise duty rates on other tobacco products like chewing tobacco or cigars.
Overall, as of February 28, 2018, the excise duty rate on 200 cigarettes increased by $2.29, rising from $21.56 per carton to $23.85 per carton. That translates into an increase of about 29 cents per pack of 25 cigarettes.
An inventory tax was also applied to inventories of more than 30,000 cigarettes, which is equivalent to 150 cartons of 200 cigarettes, held by manufacturers, importers, wholesalers, and retailers as of the end of February 27, 2018. This measure generally applies as of the day after the budget, and details of the measure are found on pages 39 and 40 of the budget supplementary information booklet. The clauses implementing these measures are all under part 2, covering clauses 47 to 67 of Bill C-74.
This completes the introductory remarks for part 2.
Thank you.