Debates of Feb. 22nd, 1994

Excise Act

[Val Meredith, Reform, Surrey—White Rock—South Langley, BC]

Mr. Speaker, I do not think I ever said that the problem was unique to one part of Canada. I said that the other parts of Canada have a similar problem but not to the same extent.

There is smuggling in western Canada along our borders but not to the same extent and it can be handled by law enforcement. I am glad the border crossing staff is going to be increased. I think the concentration of the policy should be on law enforcement and not in relaxing the Canadian laws.

I repeat, we do not solve problems by giving in to the criminal element. If we do it once we are going to end up doing it over and over again.

There is a reason for laws and there is a reason to enforce laws. When we start giving in to the criminal element and changing the laws of the land we are in real trouble.

[Jesse Flis, Liberal, Parliamentary Secretary to Minister of Foreign Affairs]

Mr. Speaker, in her back-pedalling the hon. member is really missing the boat. Let me quote for her from the letter that was tabled by the Prime Minister from the commissioner of the RCMP in which he very clearly stated:

Normally an enforcement only enhancement would work but, in this case, the smuggling problem has become so pervasive that the number of additional resources required to resolve the problem would be so intrusive as to be unacceptable-

I do not have time to finish reading it, but I refer the member to the letter from the commissioner that was tabled in the House. We are attacking this. We are attacking on all fronts as recommended by the RCMP and all the advice we have been given.

[The Deputy Speaker]

Order, please. The question is clear. The hon. member for Surrey-White Rock-South Langley, please be brief.

[Val Meredith, Reform, Surrey—White Rock—South Langley, BC]

Mr. Speaker, I cannot say it any more than I have said it before. We have laws in our land. There are reasons for our laws. I do not think we solve anything by changing our laws to give in to criminal activity.

[Bob Speller, Liberal, Haldimand—Norfolk, ON]

Mr. Speaker, I want to say to the previous speaker from the Reform Party that we do not solve any problems either by sticking our head in the sand. We had a tough decision to make. That decision was made on the basis of all the best information we had from the RCMP, from Revenue Canada, from the different provinces, from the different agencies involved. We had a tough decision to make and we made it. Unfortunately other provinces in the country have not seen fit to do it. I would suspect that in the very near future we will see a lot more come on board after recognizing the problem.

I do want to stand in support of the piece of legislation in the House today. Mr. Speaker, you know from our previous time here together that I spent a lot of time in the House talking directly about this issue. I have studied it substantially because of the make-up of my riding.

Haldimand-Norfolk has a number of tobacco farmers, probably over 800 tobacco farmers out of the 1,200 left in Canada. I also have the largest Indian reserve in the country, the Six Nations which includes a number of places that sell tobacco, over 200. It is a problem for me on both sides.

The fact of the matter is that when tobacco is smuggled my tobacco farmer constituents do not make the same amount of money because on that product they get less money for it being exported to the States. They actually get a dollar less a pound. It is a two-price system and so that product that actually is being smoked in Canada has actually been exported.

I also have on the Six Nations reserve a large number of people. I want to say to all members who might not have had an opportunity to visit reserves in the country that the overwhelming majority of people, at least on the largest reserve in the country, want to get rid of the smuggling problem.

I get more people on reserve than off in my constituency saying that we have to deal with that problem. It was very important for me to get that message out. I get a sense in the House from the other side that somehow this is just an Indian problem. It is in a sense, but it is a sense that they want to solve this problem.

That is why I was happy to see the Solicitor General take our advice on this side, sit down with native communities and try to work out solutions to this problem.

There was a time in this House when members across the way were essentially saying we have to enforce the law everywhere in the country. Let us go in shooting and we can solve this problem.

I do not think that is the solution. It is a larger problem than just enforcement. Enforcement is very important and that is why in this bill we have gone a long way to deal with the enforcement issue.

I have talked about taxation in the House as being really the only way to dramatically solve the problem, but there are other ways in which we can add to the solution. I want to go through some of the things that we have done.

We have increased customs examinations of high risk travellers. I think that is going to get a lot more smuggling than just tobacco smuggling. I think it might even help us solve our problem with the smuggling of guns and cocaine or other drugs that come into the country. We have a large border. I would suggest that over the years this problem has been a lot bigger than even we in the House talk about.

The whole question of alcohol being smuggled is only a small problem. We have guns. We have different products that are coming across our borders that need to be addressed. I think this goes a long way in helping to address those problems.

We are providing 24 hour commercial traffic clearance at 22 ports that handle 99 per cent of the commercial traffic. We are examining the service charges for off hour service at these locations. We are extending hours of service at a number of existing ports. We are conducting border blitzes that target high risk travellers and carriers.

I believe that in the bill we have gone beyond the taxation question. We have put in very needed border restrictions to make sure that we in the country control what comes into the country and we know specifically what is coming in.

The real problem we have in the country today is not as much with the smuggling but it is an acceptance by Canadians that somehow not paying their fair share of taxes, ripping off the government, is a good thing to do. Unfortunately when it starts in cigarettes it continues. Canadians have to be told that it is not only governments but their responsibility also to follow the law and make sure that they contribute to the solution to this problem.

I have never argued with the reason Canadians have been buying smuggled cigarettes. If they can get cigarettes at a cheaper price and feel that the government is not listening in terms of the taxation questions, they are going to do it. It is a question of taxation. We have to get it out of people's minds that somehow it is easy and it is natural to rip off the government by not paying taxes.

We have a $45 billion deficit. We have to attack that deficit if we are to go into the next century and compete. In order to do that people have to feel that the taxation system under which they live is a fair system.

Canadians have not felt that excise taxes on cigarettes, gasoline and alcohol have been fair taxes. As a result they have been more than willing to go around the law and do this. I think this tells Canadians that we understand these systems have been unfair and we are ready and willing to work with them to come up with real solutions.

Regarding the smuggling in the country, the only way to deal with it was to bring down the taxes. There was no other answer. In terms of the export tax on it, I have never supported an export tax. Quite frankly it is not workable. The export tax in this regard, because the provinces have come on board and because the taxes have been slashed enough, will be irrelevant. We will not be exporting that cigarette product to the United States.

Also in the bill there are exemptions for traditional exports. Those real exports that go elsewhere outside the States or the traditional ones that go to the States and are sold for consumption in the States will be protected. Tobacco farmers in my area were very pleased with that idea.

In order to solve this problem we needed to do two things. We needed to take a tough stand and we needed to bring down the taxes.

There are those who argue that somehow lowering taxes and lowering prices will let young people buy more cigarettes. I have heard many young people on television say: "Oh, good. Now I am going to have easier access to cigarettes". However that is not the case. Right now they can get cigarettes as quickly as they can buy a pizza in downtown Toronto. Cigarettes are easily obtained in school yards.

However if we put in the enforcement making sure the penalties are high for selling cigarettes to young Canadians and setting the age at a certain point, young Canadians will be protected. They will not have that access. That easy access now is through smuggled cigarettes and they get them in the school yard.

We have a good balance here. It is the balance of protecting young people from smoking, the balance of dropping the taxes so Canadians feel their taxation system is fair. At the same time there is the balance in enforcement, making sure that those who would illegally profit from this are caught. This approach will go a long way toward solving this problem.

At the same time we have taken the opportunity to sit down with Canada's first people to discuss this question with them, rather than just going in hocus-pocus with guns blazing. We are trying to work with Canadians and our aboriginal peoples to find solutions to their problems.

At the same time we are throwing a lot of people, who have been selling cigarettes granted illegally, out of work. It might be incumbent upon the government to recognize that fact. Where will they go if they are not selling cigarettes illegally? Most of these people are not the normal law breakers. Most of them are people who just want to make a buck. They did not have a job and were looking for an opportunity to make some quick cash.

This question must be raised. Not a lot of people are talking about it as it is not something that really pops up in people's minds. It is the question of making sure there is economic development on our reserves so that those people who might turn to crime because they do not have any other economic activities would have some other alternative.

[Chris Axworthy, NDP, Saskatoon—Clark's Crossing, SK]

Mr. Speaker, cigarettes are the only product that when used as directed kill.

Is the member in favour of cigarettes being included under the hazardous products act?

[Bob Speller, Liberal, Haldimand—Norfolk, ON]

Mr. Speaker, the hon. member knows that question came up before. In fact I think our hon. Speaker was on a committee that actually looked at that question.

[Douglas Young, Liberal, Acadie—Bathurst, NB]

You cannot make them safe under the Hazardous Products Act.

[Bob Speller, Liberal, Haldimand—Norfolk, ON]

No, of course not. I think it was something an NDP member raised in that committee. It is just impossible to do.

If the government wants to outlaw smoking, fine. Compensate my tobacco farmers for the value of their farms and for the value of their future livelihoods and do it.

Governments are quite hypocritical in this area. On the one hand they want all that big cash and on the other they say to my tobacco farmers that they are doing a nasty and dirty thing. That is not the case. All governments have to get off the pot on this question and make a decision. If they want to outlaw smoking then compensate my farmers. Allow my farmers to get on with their livelihoods rather than slowly strangle them to death.

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Speaker, I start by congratulating the Solicitor General and the Minister of Health for addressing what was obviously a life and death issue in the constituency I have the honour and privilege to represent in the House. I do not believe I am exaggerating the point when I describe it that way. Over recent years literally dozens of constituents of Glengarry-Prescott-Russell have been murdered or have disappeared as a result of tobacco smuggling and associated crime.

When we talk about the ill effects of tobacco on young people I wonder how many of us have stopped to think of how many times a teenager working in a cornerstore has had his brains blown out so that someone else could steal the cigarettes from the shelves of that store to resell on the contraband market. That is not just in my riding. Unfortunately it has happened several times in this country.

I want to describe the extent of this problem. It was highlighted by another member earlier today. The commissioner of the RCMP said in a letter tabled before the House: "This implies a need to reduce the tax on cigarettes significantly enough to approach parity, thereby eliminating the profit motive for smugglers". In saying that he was telling us the time had arrived whereby we no longer had the choice and this is what we had to do.

It was not always that way. I remember when smuggling was about one-tenth the amount it is now or that it was when these measures were introduced. I remember on November 22, 1991 rising in the House and addressing a question to the previous government.

This is what the then Solicitor General, Hon. Doug Lewis, replied on the subject of smuggling: "Obviously it still exists a certain extent. We are doing everything we can to eliminate it".

That is what was said at that time. In other words. do not bother us. It is not very important. It is no big deal.

The last day Parliament sat before the election again I asked a question. I had asked questions many times. I asked the following and members might think the question was a little dramatic or at least members thought so at the time. In retrospect it certainly was not.

On that occasion, I said the following:

"Almost every night machine gun fire is heard and speedboats are running the rivers at full speed in the dark with their lights turned off pursuing criminal activity. I am not describing life in Sarajevo or Mogadishu. I am describing the practice of tobacco smuggling on the St. Lawrence River near Glengarry in my riding."

I made that statement in the House on June 13, 1993. And I went on to say:

"I want to ask a question of the Solicitor General on the last day of this Parliament. What precisely does the government intend to do to stop this illegal activity which endangers the lives and safety on my constituents? What is he going to do to ensure that we stop losing billions of taxpayers' dollars in this terrible process that is going on right now 50 miles from Parliament Hill?"

Nothing was done. Yes, there was a time when we could have done other things, federal and provincial governments, and in Ontario Mr. Rae could have done something.

For two years the Ontario Provincial Police detachment at Lancaster, a stone's throw from Lake St. Francis, was closed at night. Only after I raised it publicly was the police station reopened last November. Imagine that. The police station in the area where all the criminal activity is taking place shuts down at night, courtesy of Bob Rae's cutbacks. That is what happened. He self-righteously said before the media last week and the week before he did not know this was a problem in Ontario and

that it was a regional problem in Quebec, as he or Mr. Laughren put it. Those statements were a little less than totally honest. He knew of the problem.

My colleagues from western Canada will know of the report on tobacco smuggling by the Mackenzie Institute. All of them have received copies of the report. It explains to what extent this criminal activity has gone on. If members have not received it I will gladly provide them with copies.

Everything we hear today and have heard for the last weeks in this House the Mackenzie Institute has been telling us for months. However members were not listening. This government has listened. For three years I and others tried to get the previous government to act for the safety and security of Canadians and for the respect of the law and nothing was done. Within three months the new government did something and I am proud of it.

Some people claim tobacco smuggling is a victimless crime. I want to read what Claude McIntosh, the associate editor of the Standard Freeholder of Cornwall, wrote on July 3, 1993. He was citing examples of victims of smuggling. He wrote the following:

A Cornwall welfare recipient switched to a supplier selling cartons $1 cheaper than his previous supplier. His old supplier, fearful of losing other "accounts", paid him a visit. During the conversation he had his arm broken in an "accident". He went back to the previous supplier. Welfare recipients are soft because they are: 1) more willing to take the chance, and 2) available night and day.

Listen to this one about young people. A teacher ordered a disruptive student out of the classroom. On his way out the student reached into his pocket, pulled out a wad of bills and sneered: "I don't need your education". The student works as a runner in one of the cigarette smuggling cartels with the potential to earn more in six months than the teacher does in a year.

That is the reality of smuggling. For those who wish to put their heads in the sand and think that is not a reality, well they are wrong.

What kind of message does it give to our young people when the one who is smuggling cigarettes and selling them in schools drives around in a corvette while the rest of the students walk home at night? We are concerned about young people.

The social contract has crumbled. When 60 to 70 per cent of cigarettes are sold illegally, as it is the case in Quebec-35 per cent in Ontario, very close to 100 per cent in my riding and as much as 25 to 30 per cent in Western Canada-I tell you that the social contract has crumbled in that respect and that we have returned to the so-called hobbesean state of nature: Every man for himself.

Life is brutish and short, as Thomas Hobbes put it. That is not the kind of society we want. We have to restore that social contract. The way of doing that was to take every action necessary, all governments together in concert. The federal government and the Government of Quebec did it. The Government of Ontario was dragged in kicking and screaming in order to do that which it should have done in the beginning. Nevertheless it has done so now.

There is another article from the Standard Freeholder . It was written by Claudia Peel on February 16, 1994 and is entitled: ``Smuggling is down to a trickle'':

The volume of black market cigarettes moving through this region has dropped significantly since the federal government's crackdown on smuggling began one week ago today.

OPP Det. Insp. Chris Lewis said police have seized some smuggled smokes since the federal anti-smoking plan went into effect last Wednesday. But the volume of contraband seized in the past week has been "quite a bit less" than police have been accustomed to seizing in a seven-day period.

As you can see, Mr. Speaker, action was required. I do not even have time to get into the whole issue of contraband, which thrives on illegality and leads to smuggling not only cigarettes but also drugs, alcohol and the likes.

Whether we come from western Canada, Ontario or elsewhere, whether we are separatists, sovereigntists or federalists, I think that we all have the same interests. In our society, we want laws to be obeyed. What was done had to be done. And to conclude, I congratulate the government, because that action was necessary and was taken. I hope that we will soon be able to say that we have managed to eliminate this evil that is preying upon our society.

[Ghislain Lebel, Bloc, Chambly, QC]

Mr. Speaker, I do not know if the previous speaker managed to convince himself after the fact, as his government is now trying to do, but he would like to convince us that the decision that was made was the right one.

I think that the government lowered taxes on cigarettes because it did not want to tackle the real problem and stop the distribution of contraband goods on the territory implicitly affected by this bill; instead of dealing with the smugglers themselves, they went after the product. Except that it will be easy to replace that product with another, like alcohol, drugs or cocaine. To justify themselves, they said that they asked the commissioner of the RCMP, who told them to cut taxes. It is not up to the commissioner of the RCMP to make the laws in this

government, and you also need the political will to enforce the laws. When there is no will to enforce the laws, we end up with a bill like this one.

The government shot into its own net with this. There can be no solution to this problem as long as there is no political will to intervene and break up the distribution networks for cigarettes, drugs, popcorn or whatever. We must break up the distribution networks. That is what the government did not have the courage to do.

I would now ask the hon. member who just spoke if he has a personal solution to suggest to his government to break up the distribution networks. That is where the problem lies.

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Speaker, I noticed that some hon. members were applauding, but not the hon. member for Argenteuil-Papineau, who, I think, shares some of my feelings regarding the effects of smuggling. He can see these effects from up close in his constituency. Besides, the hon. member who just asked me a question also faces a similar situation.

He talks about the distribution network. It would be very naive to think that this distribution network did not exist in all parts of society before! In my own riding or, without even going that far, how many parliamentarians know that illegal cigarettes were sold right here on Parliament Hill?

In my riding, the day before the Prime Minister made his announcement, I received a phone call from a constituent complaining that the village's local smuggler had just made a delivery to the parish priest's house. It is a sad, very sad statement.

We saw the same thing in another region with the MATRAC group, when similar statements were made by other people in society sharing similar positions. These people did not see themselves as criminals, yet they unknowingly were part of an organized crime network.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Mr. Speaker, the hon. member talked about realities. I would like to talk about realities as well.

Reality number one is that, yes, smuggling is against the law. Reality number two is that when people break the law, law enforcement should ensure that they are caught and punished. Reality number three is that in recent months it has been clearly identified that 70 per cent of the cigarette smuggling was occurring on the Mohawk reserves. Reality number four is that the previous government failed to act on this smuggling. Reality number five is that the current government has failed to enforce the law that would curtail this smuggling as well.

The reality is that for whatever reason the government has tied the hands of our law enforcement agencies, for political correctness perhaps, maybe for other hidden political agendas. The fact is that the RCMP has not been allowed to enforce the law, which is what it is supposed to do.

Another sad reality is that the government has failed to do the right thing: enforce the laws of the country. It has chosen instead to do something totally opposite, to disregard the fact that there are law breakers that have to be stopped. It has chosen to lower the price of cigarettes. That is a far cry from enforcing the law.

In reality I can imagine criminals on seeing a precedent set like this, saying: "Okay, let's look for the next one and see if we can get them to move away from law enforcement".

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Speaker, I do not think there was a question there. Let me add a reality number six or seven to what the member has just said. The reality is that the laws that were there have ceased to be laws because of the negligence of others in the past.

Law and order had to be restored. It was done because it was the right thing to do. Politically correct, my eye, I say this to all my colleagues. When my constituents were being shot at and when people were losing their lives over crummy packages of cigarettes, it was time for governments to do something, and I am proud of it.

[Jake Hoeppner, Reform, Lisgar—Marquette, MB]

Mr. Speaker, I appreciate the hon. member's comments. It almost astounds me that we fail to realize what really has caused this problem.

In the 1970s when the government of that day allowed 24 per cent interest rates, allowed farmers and businessmen to be put out of business, I stood beside graves of people who committed suicide because of the overspending and overmanipulation of the political system. Today he makes a very emotional speech. I wonder what he is going to tell his future great-grandchildren when they have no food to put on the table and they shoot each other because of it. Who will they blame then?

It is because the governments of the last 25 years have not been able to make a decent decision to enforce laws, where thousands of people died in two world wars, that is why we have this problem today. We had better realize it or we will go down in history as some of the worst decision makers ever in the country.

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Speaker, I am not sure I understood the analogy the member was trying to draw. If he is insinuating that our ancestors fought for freedom and for respect for law, that is exactly what I am advocating as well.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, this is just getting good. I hate to spoil the party by speaking in support of Bill C-11, an act to amend the Customs Act and the Excise Act and the Tobacco Sales to Young Persons Act.

In my riding of Calgary Centre this issue has attracted some concern and some comment. It is basically split 50:50. The government's four point action plan on smuggling comes under criticism where it lowers the price of cigarettes and that it impacts upon the increase in health costs and such. That is a concern and I have expressed it. Nevertheless in evaluating this bill and the steps taken by the government I feel it is worth going forward with it.

The federal government is currently losing a guestimate of $60 billion to $80 billion per year to the underground economy. This loss of revenue has a direct negative effect on the ability of small law-abiding businesses to compete in the private sector. In the end it is the Canadian taxpayers who end up paying for the loss of revenue and the increased cost associated with the lucrative practice of smuggling.

This problem is rooted in the fact that Canadians pay too much tax and have lost faith in government's ability to manage money, manage resources and live within its means. We will find out this afternoon at five o'clock how much better the government is going to do in managing resources and doing something with the economy.

Canadians are finding it more and more acceptable to purchase smuggled goods because of the taxes and surtaxes they have had to pay legally on items. This problem is not limited to just cigarettes. It is a problem related to clothing, alcohol, groceries, jewellery, guns and the list goes on.

According to government statistics the average price of a carton of cigarettes was around $45 to $48. The same carton could be purchased in the United States for $15. This differential made the cigarette trade appealing to many Canadian smokers and to a large degree organized crime.

A single case of cigarettes containing 50 cartons can produce at least $500 profit. A thousand cases per week could therefore mean a profit of half a million dollars for suppliers. With this kind of profit motive it is no wonder smuggling has become so desirable.

Canadian cigarette companies were well aware of this new market and as a result increased exports of cigarettes at an incredible rate. In 1985, 3.5 million cartons were exported to the United States. The figure now is over 62.8 million cartons per year. This increase of over 1900 per cent in eight years is not due to the fact that Americans have begun to love our cigarettes. Having gone to California quite often I know most of them hate them.

Cigarette companies knew there was a market for the product and they were using it as a means to sell more cigarettes here in Canada. It is estimated that between 85 per cent to 90 per cent of the tobacco products destined for exports find their way back here.

For non-smoking Canadians who do not feel that the problem of smuggling affects them I ask them to think again. The number of people charged by RCMP customs and excise has increased from 414 in 1990 to 3,389 to date. The number of seizures within this same timeframe has increased from 303 in 1990 to 5,044 to date.

Increased enforcement and prosecution combined with the loss of government revenues cost the government over a billion dollars a year. In the end it is every Canadian taxpayer, not just those who drink or smoke, who end up paying these costs in the form of higher taxes.

My party strongly believes that the federal government has a spending problem and not a revenue problem. Spending cuts alone will not make the problem of smuggling go away. The only way to truly eliminate the problem is to reduce the profitability to smugglers. By reducing the cost differential between smuggled and retailed cigarettes, ordinary cigarette smokers will have less incentive to seek out and purchase illegal cigarettes and on a larger scale organized crime will no longer be able to profit from it.

Only when the profit is removed will smuggling be reduced. Law enforcement alone, without the removal of the profit margin, would not be enough to solve this major problem. Bill C-11 is the first of many necessary steps toward the elimination of the problem.

It is estimated that over 70 per cent of smuggled cigarettes come through native reserves in Ontario and Quebec. As we know, this has become a major political issue over the past few weeks in the House, in question period and in the country.

The fact is, however, that people of all colours and walks of life are involved in the illegal cigarette trade. Also there has been a smuggling stigma created by a small group of native Indians who are breaking the law that is having a negative effect on the majority of native Indians who obey the law.

As some of my colleagues have said earlier, law enforcement on or off native reserves should be adhered to and should be adhered to quickly.

There have been many concerns expressed by health organizations and individual Canadians who believe that by reducing the

cost of cigarettes more people, especially younger people, children, will begin to smoke. In my opinion by raising the legal age to smoke, eliminating kiddie packs and limiting vending machines to bars the government has taken a step in the right direction toward the reduction of smoking for young people. This fact in combination with increased fines for retailers who sell to minors and fines for minors who are caught smoking will help mitigate the problem.

We must not lose sight of the fact that this bill is primarily targeted at the multibillion dollar smuggling market. Federal and provincial governments tax cigarettes and liquor not just to reduce consumption but to generate extra revenue for other programs. These so-called sin taxes combined with health awareness campaigns will not eliminate in its entirety the use and abuse of these substances.

If we go back to before this act, what were the facts? The facts were that people were smoking and that people were drinking, except that the purchase of cigarettes went into an underground economy. This is an attempt to bring it to the surface. It is up to all Canadians to deal with this problem at home, in schools and in their communities.

If further measures need to be taken by the government then we should vigorously examine all of our options. The bill addresses organized crime, the tobacco companies and respect for the law.

The critics of the bill, including some of my caucus members, have focused on health care costs rising, more young people smoking and the loss of revenues at a time when government can least afford it. There are other means available to deter smokers without relying on taxation only. For instance, we could have variable insurance premiums for smokers and non-smokers, the same with alcohol drinkers and non-alcohol drinkers, the same with automobiles in that the more accidents one has or the more risk one is the higher the premium.

The issue with respect to children is being addressed because to combat the lower price it is prudent and wise of the government to raise the legal age, introduce fines, enforce them on the school yards and restrict the use of vending machines to those venues that must check the age of the customer. Also, as I mentioned earlier, by eliminating mini-packs and labelling cigarettes for export this will restrict the flow of illegal and legal cigarettes to the youth of the country.

Furthermore, the advertising and education programs about the effects of smoking should be recognized as an influencing factor, although not an end in itself. Despite the many lectures of parents to their children, despite the many TV commercials, people still smoke.

We must remember that at the end of the day, try as government might, it really cannot legislate through taxation totally a country's social behaviour. It can only have an influence.

Through this bill organized crime will be neutralized by the removal of profit and greater law enforcement. The two go hand in hand. My colleague, my seatmate, has indicated that law enforcement is the cure and I agree with her. I also believe that we have to lower the price to take the profit out of it.

The tobacco companies are also being addressed and in a way punished for their past behaviour by the introduction of an export tax of 8 per cent.

The increase in their corporate tax rate from 21 per cent to 30 per cent and a 3 per cent surtax on the tax paid portion, which according to the Department of National Revenue will generate $200 million more revenue to the government, are indications that the tobacco companies are not getting away scot-free on this.

In conclusion, law enforcement and respect for the law are very imperative, despite what the hon. member from the Liberal Party said earlier that they are doing it. They are not doing it. We have not seen any evidence of it being done but the RCMP must move swiftly to those known major areas of smuggling activities to eliminate the perception of two sets of laws in Canada.

If this is not done and not done swiftly then all the critics of this bill will prove to be right and the government will be totally embarrassed. I do not smoke but I might go out and have one.

[Julian Reed, Liberal, Halton—Peel, ON]

Mr. Speaker, I listened with interest to that contribution from the hon. member for Calgary Centre.

He has taken quite an enlightened approach to this problem and pointed out a problem that every member has in the House which is that his or her constituents are split on the issue of taxation and the impact of taxation.

It should be reinforced that the only reason tax reduction was introduced was that simply to impose an export tax would only look after about half of the cigarette smuggling problem.

Close to half of the product that has been coming across the border as we all know now is counterfeit. It is manufactured in the United States and it has very nice looking Canadian packages and Canadian labelling. It is very difficult to tell it from the real thing.

That was obviously the reason why that tax reduction was introduced. One thing that we can do is convey to all the citizens of this country through our constituencies that there was a reason for it. It is not intended to knuckle under to the tobacco industry. As a matter of fact it will be reinstated as soon as this problem is brought to an end.

It is also important to put on record that Mr. Clinton in the United States with the introduction of his medicare bill has made it clear that tax will be added to American tobacco. That effort should help us a great deal. It behooves us all to encourage Mr. Clinton to bring that new tax in in the United States sooner rather than later.

This is where the member for Calgary Centre slipped. He had my attention until he said there is no law enforcement. He will find and we all will find very quickly that the law is being enforced and it is being enforced very well. The RCMP is doing its job.

Already we have a news report that in one area particularly smuggling has been reduced to a trickle. The smugglers are beginning to be put out of business. In the next few months we will be standing in this House applauding the RCMP for the very fine work it has been doing.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I appreciate the member's opinions and comments. We know where the lines of communication are. The RCMP knows where they are. Why is there not a headline? Why are the people who are doing it not captured?

I disagree that it has enforced the law. For months we have heard the same thing from the Prime Minister. He said that there is no such thing as a no-go zone and that the law will be enforced across the land. We see on television time after time, as a lot of the Bloc members brought up, that it is not being done.

I would like to see the law enforced. I would like to see the police visual. I would like to see the police rather than the politicians capturing the headlines. I would like to see these crooks put in jail. That is what I would like to see but it is not happening.

The Prime Minister said he had a great reluctance to lower the tax, fine. The person who talked him into it was the head of the RCMP. This is what he needed in order to do his job, take the profit out of it and then he will go and capture these guys. Fine, the great RCMP can go and capture them. Let me see them captured. I have not seen it yet.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Mr. Speaker, I can agree about 85 per cent with my colleague from Calgary Centre.

First, I agree with him most emphatically that the law enforcement the government has talked about simply has not happened. I draw a comparison between what would happen in a neighbourhood in most communities in Canada if there were a suspicion for example that there was an illegal marijuana garden in the basement of a house.

I can assure members that from seeing the results of such activities in the papers over many years the RCMP is over that residence like a swarm of bees. I suggest that growing marijuana is breaking the law the same as smuggling cigarettes. I have not seen the RCMP forces over the known areas of smuggling like a swarm of bees like we would see in other communities. I suggest that although law enforcement has been spoken about by the government it has not been happening.

I also agree that a combination of law enforcement and tax changes regarding cigarettes is necessary to solve this problem. However I suggest a different formula.

I suggest that rather than reducing the taxes on cigarettes in Canada we should have doubled the export tax that we presently have to $16 a carton. With the extra $8 a carton we could use that money to pay for increased law enforcement to cut down on the smuggling. We could cover the areas where the smuggling is taking place with a larger and more effective police force, one that was being paid for by the export tax that should have been added to the cigarettes.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, the member did not agree with me 100 per cent so I cannot have him as a seatmate.

[Bill Rompkey, Liberal, Labrador, NL]

Eighty per cent is not bad.

[Jim Silye, Reform, Calgary Centre, AB]

On his second point, as a constructive alternative I do not really disagree with that suggestion. However it is not within our power to makes those kinds of rules. I can say that by admitting that he has agreed to 85 per cent of what I said, we will have another Reformer voting for the bill.

[Garry Breitkreuz, Reform, Yorkton—Melville, SK]

Mr. Speaker, I do not know if I should put my hon. colleague on the hot seat, but I would like to run this past him and see how he would respond.

There are many honest citizens in this country who object to taxes but who do not break the law in order to make their point. Here we have a government that has responded to illegal activity and reduced taxes. There are many farmers who have supported the Reform Party who really want tax reduction. Why does the government not respond to them with the same urgency with which it responded to a certain element in society?

I wonder what my hon. colleague would say if I said there are many honest citizens in the country who really want tax reduction but do not break the law in order to do that. How can we reconcile what we have done here? If we support tax reduction for this reason why do we not have that same urgency in supporting it for the many honest people?

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, that is a very difficult, tough question. I guess a way that I would try to answer that is that the number of smugglers is low. The people who are cheating the system and who are developing this market are few, whether native Indians, white Anglo-Saxons, Chinese or American. We are not focusing on capturing the criminals. Where they sell the smuggled cigarettes is into a marketplace that a lot of Canadians have been willing to go because of the overspending of government after government after government, Liberals, Conservatives and now back again to Liberals. Instead of people going to

the store and paying somebody $48 a carton they will buy it if somebody shows up at $22.

To solve that problem, take the profit out of it and we have it cured. If there is a health problem, there are ways that we can solve the health problem. If alcohol becomes a problem, we can solve that problem. It is not the honest farmers who are causing the problem. It is the few and minor elements of society that are making the many in society look bad and they are holding up the many in society to ransom.

I hope I have answered the question somewhat.