Debates of Feb. 8th, 1994

Lowering Of Taxes On Cigarettes

[Michel Gauthier, Bloc, Roberval, QC]

Mr. Speaker, my question is for the Prime Minister.

On January 20 last, the Prime Minister said: "If both levels of government cannot co-operate, if one acts and the other does not, then we will not get the hoped-for results".

Fifteen days later, does the Prime Minister still agree with what he said and can he tell us whether he believes his plan to roll back cigarette taxes to combat smuggling could prove ineffective given that no other provincial government, aside from Quebec, has agreed to come on board?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, certain provincial governments have not yet reacted. They are studying the proposal which is being extended equally to all provinces.

In my opinion, the Government of Quebec is facing a much more serious situation, which explains why it has decided to accept the offer we made very seriously. I am pleased that it did so.

As for the other provincial governments, we will see what they will do. We however have not backed away from our responsibilities. We began discussions with the provinces, and specifically with Ontario in December. Eventually they will have to make a decision and that is what we have done.

[Michel Gauthier, Bloc, Roberval, QC]

Mr. Speaker, in spite of some vigorous opposition from Ontario members within his own caucus, the Prime Minister has decided to move on this plan anyway and to roll back cigarette taxes. Is he not concerned that Ontario's refusal to come on board with his plan could turn that province into the next centre of smuggling in Canada?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, as Prime Minister of Canada I took my responsibilities. If others do not want to act that is their responsibility.

To pretend there is not a problem when one-third of the market of cigarettes is sold under the table is an opinion I do not share.

[Michel Gauthier, Bloc, Roberval, QC]

Mr. Speaker, this morning the Prime Minister said in his statement here in the House, and I quote: "Along with these resources are new strategies to crack down on organized smuggling groups and to increase surveillance of these groups".

Could the Prime Minister tell us whether other strategies will include providing the RCMP with new equipment or action plans appropriate to this particular situation?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, we have told the RCMP officers we would support them in this difficult endeavour. We intend to do what has to be done to help them. As far as day to day strategy is concerned, that is the RCMP's responsibility, and in situations like this, it is no use giving away the game plan to the other side. It is better to keep it quiet until we are ready to use it.

Cigarette Smuggling

[Michel Bellehumeur, Bloc, Berthier—Montcalm, QC]

Mr. Speaker, my question is also for the Prime Minister. As the RCMP itself admits, cigarette seizures by police forces last year amounted to only 1 per cent of all the contraband. It is a real sieve! Nevertheless, the government repeated again today in this House that it intends to enforce the law throughout Canadian territory.

Can we take the government seriously today when it promises to enforce the law throughout Canada, without exception, while smuggling is going on with the knowledge and in full view of the police authorities, who have not made any move to stop the smugglers?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, I think that the figures given by the Solicitor General in this House in recent days prove that a tremendous amount has been seized and that there will be much more now that we have given them everything they need to do so, and we have also helped the personnel of the Department of National Revenue do a better job. Given the size of the problem, they needed reinforcements and the government has given both the RCMP and the Department of National Revenue the necessary reinforcements.

[Michel Bellehumeur, Bloc, Berthier—Montcalm, QC]

Mr. Speaker, I wish to ask the Prime Minister a supplementary question.

Does the Prime Minister make the commitment that the federal government will end the activities of some 500 smugglers in the Akwesasne region, identified yesterday by his colleague from Sault Ste. Marie, the Minister of Indian Affairs?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, I think that I said very clearly that the law will apply everywhere in Canada. The notion of some people trying to make this just a problem of the natives of Canada is not correct. It is not true at all. There are problems across the nation. What the member is trying to do is create the impression that the problem is a native problem when, as I said today in the House, there are two million people in Canada who are buying illegal cigarettes. So there are two million people involved. That does not mean it is just an Indian problem. It is very unfair to try to create that impression.

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, my question is also for the Prime Minister. The Prime Minister announced today the government's action plan on smuggling but the plan was not accompanied by a detailed breakdown of the costs of this program to the Canadian taxpayer.

Can the Prime Minister tell us what the net cost of this program will be on an annual basis and is he willing to table in the House the detailed cost breakdown of this program?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, there will be a budget in a couple of weeks and all the expenditures of the government will be listed on the balance sheet for the whole nation. This is a problem we are tackling at the moment. I said this morning that it will cost some money. However if we do not act now it will cost a lot more in the medium term.

We think that over a period of one year or a year and a half not only will this program be effective but we will gain more revenues than we have right now if we are successful and we intend to be successful.

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, I have a supplementary for the Prime Minister on the revenue side.

The Prime Minister said that the proposed tax cuts in connection with the action plan on smuggling will reduce federal revenues in the fiscal year 1994-95 by approximately $300 million. This figure is obviously based on certain assumptions about provincial participation.

Could the Prime Minister tell the House what the total loss in federal and provincial tax revenue would be if all provinces participated in the plan to the same extent as Quebec?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development -Quebec]

Mr. Speaker, from the federal government's point of view, the fact is that the more provinces that participate, the greater the legal sales that will occur and therefore the less the hit on the federal government.

The numbers that we have, and these are really based on an average, show that in the first year, as the Prime Minister has said, there would be a $300 million hit coupled with an approximately $150 million inventory rebate. That will very quickly decline to $25 million in the second year. In fact by the third year the nation's fisc begins to show a substantial improvement, rising to $150 million to $275 million.

In addition to the costs that I outlined at the beginning, it would appear that there would be approximately $150 million to $160 million of enforcement costs arising out of RCMP, customs, justice and health.

That does not lead to very substantial government revenues that are going to occur immediately as a result of the tax measures that the Prime Minister announced in his speech this morning relative to the companies themselves.

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, I thank the minister for that answer. I have a further supplementary for the Prime Minister.

The Prime Minister's announcement today was not quite clear on all of the additional costs that will be incurred by the RCMP, the customs branch, the ministry of health, the justice department and so on to implement the various aspects of the government's action plan on smuggling.

Can the Prime Minister tell the House what the total implementation costs will be on an annual basis and can he table a detailed breakdown of that cost?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, it would be about $150 million to enforce that, but we have to keep in mind that if we are very successful we will gain more revenues from stopping the smuggling of liquor, which is not mentioned at this time. A lot of Canadian citizens who are making money under the table now will have to pay income taxes. There will be an offset that cannot be measured with a spoon. We have to see what exactly will be the effect of the program.

However, when the people of Canada respect the law and pay all of their taxes we will be in a very positive position.

Indian Affairs

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

Mr. Speaker, my question is for the Prime Minister.

Yesterday, in the house, the Minister of Indian Affairs said that he did not want to force another Oka. He was in a way explaining why his government is reluctant to take action on the reserves of Akwesasne, Kanesatake and Kahnawake in order to put an end to smuggling.

Why is it that the Prime Minister refused to meet, on an urgent basis, the Mohawk leaders of Akwesasne, Kanesatake and Kahnawake?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, the chiefs of the three reserves had the opportunity to meet with officers of the RCMP last Friday and they will meet with the Solicitor General tomorrow morning.

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

Mr. Speaker, the Minister of Transport is having a hard time keeping his cool, but I will try to put my question anyway.

[Some hon. members]

Hear, hear!

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

I am trying to take part in a civilized debate. May I speak, Mr. Speaker?

[Some hon. members]

Oh, oh.

[The Speaker]

Order, please put your question.

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

Will the Prime Minister commit himself to meet with Mohawk leaders in order to defuse tensions and to reaffirm his determination to enforce the law everywhere on the territory, while demonstrating clearly that he will not be swayed by threats of armed reprisals?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, I have nothing to add to what I said. Indian chiefs met with the

RCMP on Friday and they will meet the Solicitor General tomorrow. I repeat we intend to enforce the law in all regions of Canada.