Mr. Speaker, I have only a few minutes but I want to make several points. I was going to take the opportunity to go through Bill C-32 point by point, but time does not allow that. I will simply summarize what our position is and then make a few supplementary remarks.
Reformers are going to come out opposed to this bill basically because we did not want the tobacco tax to be reduced in the way it was. You may find it rather surprising that Reformers would oppose a tax reduction. One of the reasons we were elected was to reduce government spending so that taxes could be reduced but in this case, we cannot agree with what has been done for the following reasons.
My constituents have told me this as well. They did not like the way the government responded to the criminal element by reducing taxes very quickly. They would have preferred that the government look at the enforcement problem first and address some of the other issues, maybe apply an excise tax on the exported tobacco products.
More and more people will be encouraged to smoke. We already see this happening among our young people. For this reason we cannot support this reduction in the tax.
Because of this increase in smoking we will have long term health costs for Canadians which have not been factored in. The government should have done some planning in this regard, some investigation as to how this would affect our health care system. That is a priority with people. They have told us that above all else we should preserve our health care system. We should not cut back on costs and this will probably increase the costs rather than reduce them.
We should also have tried more aggressive enforcement measures. Seventy per cent of the cigarettes were brought in through the reserves. Maybe there was a way to address that problem.
We would have liked to have seen a new export tax on tobacco products tried before the lowering of taxes took place. We could probably have worked together with Americans in this regard but now they look at us and say: "The Canadians have reduced their taxes, so we don't have to increase ours. It doesn't work".
There will also be a problem between provinces. There is a smuggling problem between Canada and the United States and now we are going to have a smuggling problem among various provinces. How will that be addressed? What will happen in that regard? I realize some measures have been taken here to try to control that, but it could be a problem.
In February when Bill C-11 was introduced we pointed out that when the criminal element sees that the profit is no longer there for tobacco they will turn to other things. As my colleague has already admitted, they will probably begin importing alcohol and other things.
We support the imposition of the new excise tax on exported tobacco products. Senior officials informed us that before the tax changes were implemented, between 30 and 40 per cent of the total production of tobacco manufacturing in Canada was exported. The tobacco companies now agree that only 3 per cent was legally consumed in the United States. This shows the extent of the smuggling problem. It could have been controlled at this end before it even went to the states.
This law now allows tobacco manufacturers to export 3 per cent of their production tax exempt. Reformers believe that this new export tax should have been tried before lowering the tax.
The legislation implements measures to ensure that unmarked tobacco products sold to Indians on reserves in Ontario and Nova Scotia are taxed at the same rate as marked tobacco products sold in the two provinces.
Also retailers and wholesalers are owed an estimated $150 million in rebates on excise taxes on tobacco products held in inventory when the excise tax was reduced. The minister cannot issue the rebate cheques until this legislation is passed. While we oppose the reduction in tobacco taxes, retailers are likely to get upset if we delay the bill. We do not want to hold it up for that reason.
Finally, Reformers support the adjustment to the fines for illegal possession or sale of unstamped tobacco products. We believe that those who are breaking our laws should be punished. We also support the health promotion surtax, an increase of 40 per cent of taxes paid on profits by the tobacco manufacturers. We feel this is a positive measure. On most of these measures we support the government. However, on the reduction of the tobacco tax we cannot support it.