Thank you, Mr. Chair.
I'm here today to discuss the two proposed excise measures that were included in budget 2017 regarding tobacco and alcohol taxation, which are included in part 3 of the bill in front of you.
The first measure deals with tobacco taxation. You will find it in the following clauses: clauses 45 to 48, clause 51,clause 54, clauses 58 to 63 and clause 66.
In order to maintain the intended total tax burden on tobacco products, and in conjunction with the repeal of the tobacco manufacturers' surtax, the first excise measure proposes to adjust the rate of tobacco excise duty to ensure that the peak level of revenues collected under the surtax in the early 2000s will be collected under the excise duty framework. For example, the excise duty rate on cigarettes will increase by 53¢ per carton of 200 cigarettes, rising from about $21.03 per carton to $21.56 per carton.
To ensure that the increase is applied in a consistent manner to all cigarettes at different trade levels, an equivalent inventory tax will also apply to inventories of more than 30,000 cigarettes held by manufacturers, importers, wholesalers, and retailers as of the end of the budget date.
All these measures generally apply as of March 23, 2017.
The proposed change to tobacco taxation should generate an additional $55 million in revenue in the 2017-2018 year.
The second measure that I am responsible for and that you are studying today is the federal excise duty on alcohol. You will find it in clauses 42 to 44, 49, 50, 52, 53, 55 to 57, 64 and 65.
It is proposed to increase the excise duty rates on alcohol products by 2% and to automatically adjust these rates to account for inflation on April 1 of every year, starting in 2018. The government generally applies an excise duty on alcohol products such as beer, wine, and spirits that enter into the Canadian duty-paid market. Alcohol excise duty rates were effectively last adjusted in the mid-eighties, so therefore, their effectiveness in real value has eroded over time.
In 2017 the proposed measure represents an increase in excise duty of 5¢ per case of 24 bottles of beer, less than 1¢ per bottle of wine, and about 7¢ for a typical bottle of spirits. The proposal is expected to generate about $30 million in additional revenue in 2017-18.
This measure also goes into effect generally on March 23, 2017, the day after the budget was tabled.
That completes my summary of part 3.
Thank you.