Finance Committee on May 30th, 2022

[Yvan Baker, Liberal, Etobicoke Centre, ON]

I'd like a recorded vote.

(Amendment negatived: nays 6; yeas 5 [See Minutes of Proceedings])

(Clause 21 agreed to on division)

[The Chair, Liberal, Peter Fonseca]

Members, there are no amendments submitted to clauses 22 to 39. These clauses are all in part 1 of the bill. Again, do we have unanimous consent to group them for a vote?

(Clauses 22 to 39 inclusive agreed to on division)

(On clause 40)

[The Chair, Liberal, Peter Fonseca]

Now we are at clause 40, and there is an amendment from the Conservatives. Members, if CPC-4 is adopted or defeated, Bloc-3 and NDP-3 cannot be moved, as they are identical.

I have MP Lawrence. Do you wish to move the amendment?

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I do, Mr. Chair.

Thank you for your excellent chairmanship.

This is complementary to the amendment already made by MP Blaikie and also my earlier one.

The critical part about this is that, instead of codifying things in tight prescriptive regulations, it gives CRA the autonomy to release guidance. As anyone with any experience in the charitable sector knows, of course, it is a very broad, very wide swath, so by locking charities into a particular codification of tight prescriptive regulations, you will create a very challenging set of circumstances for the sector. That is why we brought this, to remove those tight, overly prescriptive regulations and instead give CRA the autonomy to provide guidance and support to the charitable sector instead of providing prescriptive regulations that will create nothing but challenges for the charitable sector.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Lawrence.

I don't see any other members wanting to speak to this.

Shall CPC-4 carry?

[Yvan Baker, Liberal, Etobicoke Centre, ON]

A recorded vote, please.

(Amendment agreed to: yeas 11; nays 0 [See Minutes of Proceedings])

(Clause 40 as amended agreed to on division)

[The Chair, Liberal, Peter Fonseca]

Members, there are no amendments submitted for clauses 41 to 51. Clauses 41 to 51 are all in part 1 of the bill. Again, do we have unanimous consent to group them for a vote?

(Clauses 41 to 51 inclusive agreed to on division)

Members, there are no amendments submitted to clauses 52 and 53. Clauses 52 and 53 are the only two clauses in part 2 of the bill. Do we have unanimous consent to group them for a vote?

(Clauses 52 and 53 agreed to on division)

Members, there are no amendments submitted to clauses 54 to 130. Clauses 54 to 130 are all in part 3 of the bill. Do we have unanimous consent to group them for a vote?

(Clauses 54 to 130 inclusive agreed to on division)

(On clause 131)

This brings us to clause 131. There is an amendment from the Bloc. We have Bloc‑4.

I see that Monsieur Ste-Marie's hand is up.

Go ahead, Monsieur Ste-Marie.

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

Thank you, Mr. Chair.

As I mentioned at the top of the meeting when I was speaking to my point of order, instead of moving BQ‑4 as originally written, I will be proposing a modified version. The new amendment was sent out earlier today.

I will take a few moments to read it, and then, I will say a few words about both the form and the substance of the amendment.

I move that Bill C‑19, in clause 131, be amended by replacing lines 15 to 19 on page 106 with the following:

(3) Subsection (1) does not apply to wine (a) that is produced by an individual for their personal use and that is consumed in the course of that use; or (b) that is produced from honey, apples or any other prescribed agricultural or plant product. (2) Subsection (1) applies after June 29, 2022.

Clearly, this provision could change given the amendments that may follow.

Australia took legal action against Canada regarding the excise tax on wine, wine made from grapes, to be precise. The dispute did not relate to mead or cider.

The committee heard from industry representatives about their high production costs. They said that the excise tax could limit the growth and development of their fledgling industry in the country.

The least we can do is adopt this amendment, which is in line with the settlement regarding the dispute between Canadian and Australian wine producers. It only makes sense.

As for whether the amendment is admissible, I would say that this does not create a new tax. This does not broaden the legislation's reach. It simply amends an existing measure, so I am asking the committee members to support this amendment.

Mead producers and cider makers explained to the committee the impact this legislation could have on their industry.

The problem lies in the fact that the federal government is conflating wine, cider and mead, and this amendment would fix that. As I see it, the amendment is entirely admissible.

Once again, I urge my fellow members to vote in favour of this amendment to support our cider and mead producers.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste‑Marie.

I have PS Beech up next and then MP Albas.

Go ahead, PS Beech.

[Terry Beech, Liberal, Burnaby North—Seymour, BC]

Thank you, Mr. Chair.

Thank you, Gabriel, for this amended version of BQ-4.

The language itself is very similar to the language of the previously circulated Bloc-4 amendment, which I understand would have required a royal recommendation, as it would have infringed on the Crown's prerogative on taxation revenues. A similar concern was discussed previously, as members know. I would also like to point out that it's our belief that the motion would bring Canada in contravention of a previous WTO ruling.

Given that the amendment is very similar to Bloc-4, I'd like to ask the officials and the legislative clerk if this new version requires a royal recommendation and for a rationale, whichever way that is decided.

[The Chair, Liberal, Peter Fonseca]

Do any officials have information that they can impart?

[Darren D'Sa, Adviser, Tax Policy, Department of Finance]

I can speak for the officials.

[The Chair, Liberal, Peter Fonseca]

Go ahead, Mr. D'Sa.

[Darren D'Sa]

Our view is that a royal recommendation is not likely required, but that's for the House of Commons and the clerk.

[The Chair, Liberal, Peter Fonseca]

Are there any other officials? No. Okay.

MP Beech, from conferring with the legislative clerk, it would be admissible.

Now I have MP Albas.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you, Mr. Chair.

I appreciate your giving clarity on that. I would hate to have gone through a procedural rabbit hole to discuss the admissibility rather than actually talking about the substance of the motion.

I'd like to thank MP Ste-Marie for bringing this forward.

Look, I'm no fan of how the government absolutely botched the WTO challenge and capitulated to Australia, but they did. The only thing is that they didn't properly look at the law, and now it's the members of Parliament who have to hear from witnesses on the cider industry. The association for Canada, the provincial one for Quebec, the honey mead producers—all of them came in and said they are stuck under the same banner as wine.

I will tell you, Mr. Chair, that the economics of the cider industry and the mead industry, as was put out by those associations, are incredibly different. Unfortunately, by lumping them into the same regime as wine, the government has set up those respective industries for failure, much as they have with the Canadian wine sector. The wine sector has challenges with it. They understand what the government gave up. They are still hoping that the government will be good on its word to make it whole. It's something that is yet to be seen.

Let's stop damaging our growing industries. The cider industry utilizes local product. The same goes for the mead producers. Let's allow them to grow. Those mead producers, as you might remember—we had the mead association from Quebec—said they are not at the same scale as a brewery or a winery. They are very small-scale productions. Costs are high. Adding excise would be extremely damaging. Ditto for the cider industry, one that has been showing some promise. Again, I would just hate to see us starting to rely on American product to make up for the fact that the Canadian tax regime, the excise tax increases here, would force them to use cheaper products that often are not from this country.

If we really want to support farmers, if we really want to support the value-added sector, whether it be mead or cideries, let's support this amendment. Let's try to undo some of the potential damage that could and most likely will happen if this amendment does not pass. I would ask all honourable members to just vote in favour of this. It's not going to be a tremendous amount on the government. When that industry is maybe a little bit bigger, the government should probably start paying attention to them, but at this point, let's just do no harm.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Albas.

I see that MP Ste-Marie's hand is up.

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

Thank you, Mr. Chair.

Regarding the World Trade Organization, or WTO, challenge, I would note that the dispute between Australia and Canada over wine actually pertained to wine made from grapes. In fact, the Quebec government pointed out to the Australian government the distinction between wine made from grapes and cider or mead. An agreement with Quebec was reached, and the legislation reflects that distinction. We are calling on Ottawa to do the same thing Quebec did, in other words, not to lump cider and mead in the same category as wine, which is made from grapes.

There was no dispute between Australia and Canada over cider or mead. What we are asking the government to do is, number one, draw the distinction between cider or mead and wine, which is made from grapes and which was the focus of a dispute, and number two, support two very important industries, as Mr. Albas highlighted.

Supporting this amendment, and by extension cider and mead producers, does not give rise to any issues whatsoever. It would not go against the WTO decision because Australia already came to an agreement with Quebec on the very same thing.

If the committee votes against this amendment, it will be forcing cider and mead producers to pay a tax because we are cutting corners and not doing our duty. We must support them; that is our job.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Ste-Marie.

I believe MP Albas has a final comment on this.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

No, but I just wanted to note that in attendance here in the room we have MP Ben Lobb, from Huron—Bruce, who has championed excise reduction for spirits. I'm glad he's here, because he knows so much about this particular role, and I do hope that MP Lobb—I'm lobbying him—will support this as well.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Albas.

Welcome, MP Lobb.

I see that MP Blaikie has his hand up.

Go ahead, MP Blaikie.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

I just wanted to thank Mr. Ste‑Marie for his amendment and his explanation regarding the WTO decisions and the dispute with Australia over wine made from grapes.

I agree that it makes no sense to treat cider and other such products like wine, particularly if it's going to hinder a very promising industry here, in Canada. That said, I am happy to support the member's amendment.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Blaikie.

I don't see any more hands up.

Shall amendment BQ-4 carry?

[Yvan Baker, Liberal, Etobicoke Centre, ON]

May I have a recorded vote, please?

(Amendment agreed to: yeas 6; nays 5 [See Minutes of Proceedings])

(Clause 131 as amended agreed to on division)

(Clause 132 agreed to on division)

(On clause 133)

[The Chair, Liberal, Peter Fonseca]

Clause 133 has an amendment from the Conservatives.

MP Albas, do you wish to move that amendment and speak to it?