Finance Committee on May 27th, 2021

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. Fast.

[Ed Fast, Conservative, Abbotsford, BC]

Can I ask you what the purpose was for increasing the rate of tax on tobacco products? Was it to increase tax revenues? Was it to get Canadians to stop smoking? If so, has an analysis been done to determine how much an incremental increase in the tax on tobacco products would impact the rate of smoking in Canada?

[Pierre Mercille]

I think the answer is all of the above. Phil King, who is in the waiting room, may be in a better position than I am to answer about tobacco rate cessation and those kinds of things.

[Ed Fast, Conservative, Abbotsford, BC]

Sure, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

Can you let Mr. King in, Alexandre?

[Pierre Mercille]

I'm going to repeat in French while he is joining.

Yes, those are probably the two objectives, but I will let Mr. King answer questions about the effect of tobacco taxes on consumption.

[The Chair, Liberal, Wayne Easter]

There's Mr. King.

Phil, go ahead. Did you hear the question?

[Phil King, Director General, Sales Tax Division, Tax Policy Branch, Department of Finance]

I certainly did.

Thank you, Mr. Chair, and thank you, Mr. Fast.

Pierre is correct. Indeed, the goal is twofold. It is to raise some revenue and to discourage smoking. Excess taxes are fairly effective at doing that. If you look at smoking rates in Canada, they've gone from about 25% for the adult population in 1999 or so to around 15% now. That's in the context of increasing taxes, not just at the federal level but at the provincial level as well. Generally provincial taxes are a bit higher than the federal tax on tobacco.

I think your specific question is about how effective it is and if we can quantify it. I wish I could give you a firm answer. I wish I had a very good, well-specified model so that I could say that a dollar in tax gets you this sort of decline rate. The decline rate is not an issue that is amenable to that sort of thing. There are lots of moving parts, you see. The past isn't really a good guide to the future on this issue.

For example, far fewer people who smoke, and the nature of those smokers is a bit different. You're kind of down to the hardcore smokers, so maybe they don't respond as much to prices as people did many years ago. You have different products in the market—

[Gabriel Ste-Marie, Bloc, Joliette, QC]

A point of order, Mr. Chair.

I am sorry, but the interpreter is not able to do the translation.

[The Chair, Liberal, Wayne Easter]

Mr. King, where is your mike, or are you maybe using your computer?

[Phil King]

I'm on the computer, and the microphone is at mustache level.

[The Chair, Liberal, Wayne Easter]

Are the translators having a problem translating this witness?

We're okay now, I think, according to Mr. Ste-Marie. Go ahead, Mr. King

[Phil King]

I'm sorry. Would you like me to rewind a bit?

[The Chair, Liberal, Wayne Easter]

Yes. Maybe you'd better do that.

[Phil King]

I'll start with the issue of the modelling. It would be very nice if we could say specifically that a dollar increase in tax leads—

Is that no good?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Mr. Chair, a point of order. It is not working.

[The Chair, Liberal, Wayne Easter]

Okay.

Mr. King, can you do both languages or not?

[Phil King]

I cannot do it justice.

[The Chair, Liberal, Wayne Easter]

Okay.

[Phil King]

Would it be possible to provide an answer in French as a follow-up to the committee?

[Ed Fast, Conservative, Abbotsford, BC]

No.

[The Chair, Liberal, Wayne Easter]

Alexandre, what's your point?

[The Clerk]

Mr. King, do you see below the screen, on the bottom left, a mute-unmute button and an arrow pointing upwards?

If you click on the arrow, it says “Select a microphone”.

[Phil King]

There is no “Select a microphone” button. There is “Select camera”, but no microphone.

[The Clerk]

Okay. Try to unplug and replug your microphone. Sometimes that resets it.