House of Commons Hansard #90 of the 35th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was cigarettes.
Excise Tax ActGovernment Orders
The Acting Speaker (Mr. Kilger)
Order. I do not believe the hon. member has a point of order. Certainly it might be a matter of debate for another time and place.
Dick Harris Reform Prince George—Bulkley Valley, BC
Mr. Speaker, I would be happy to debate the truth of how the country should be run with any member or members opposite any time they want.
I believe the bill will create more smokers because of the lower cost of cigarettes. In particular it will target and encourage younger smokers, people who have never smoked before, to begin to smoke because now the cost is so affordable. All this will create a huge demand on the already strained health care crisis in our country.
The government sought to battle smugglers at the expense of the health of its citizens. There is no doubt about that in the bill. It should have been looking at stricter ways to enforce the laws against smuggling. That is where the answer lies. It is not in trying to go into competition with the smugglers by selling cheaper cigarettes than they can.
With the introduction of the bill the government simply acquiesced to smugglers and is now trying to undercut their pricing. This is a shameful way to deal with law breakers. The government should be ashamed of itself. Without an attempt at stricter enforcement the government has now entered into competition with the smugglers. What a fine way to uphold the criminal justice system in the country: go into competition with smugglers.
I could give a few examples. If that is the way the government is going to treat people who break the law, by going into competition with them by offering a cheaper price, it could really get carried away. I will not cite some of the instances we talked about earlier.
No one disputes the fact we had a serious problem with respect to contraband cigarettes. It was a big problem. In 1981, 1 in 176 packs of cigarettes were smuggled into Canada. By 1992 that number had risen to 1 in 6 packages. We had a problem.
It is estimated that smuggling represented a yearly loss to Canadian retailers of some $1.2 billion. The government should have been looking into tougher laws and increased enforcement of those laws rather than going into competition with the smugglers. People looking at this action from afar would say that the government was dealing with law breakers and would expect that it would enforce the laws. However the government lowered the price of cigarettes and went into competition with them. Those people would have to scratch their heads and ask what is going on down there.
The government talks about the cost of enforcing the law and asks why the Reform Party is going off on tirades about spending more money on law enforcement. As a matter of fact the Reform Party has always advocated increased spending in law enforcement areas. We have always advocated that and we always will. The government would like to cut back and take a more middle of the road approach or it is society's fault approach to it. Canadians are demanding that we get tougher on people who break the laws.
At present some provinces have chosen not to reduce any provincial tax on cigarettes. What has happened? It has resulted in the creation of smuggling within Canada. We have taken one problem, smuggling between the U.S.A. and Canada, and have created another. Now a package of cigarettes can be bought in Ontario for about $2. They still cost $6 or $7 in B.C. This is sort of free enterprise, but it is against the law and the government created it with Bill C-32. The bill does nothing to stop interprovincial cigarette smuggling.
It proposes that interprovincial smugglers will be susceptible to a tax penalty of three times the excess tax avoided. This is only a slap on the wrist. Interprovincial smugglers with this kind of penalty are still making a fortune in what they are doing.
Such a penalty is of little significance to these people and would impact little, if any, on the profit margins of smugglers shipping cigarettes from Ontario or Quebec to western Canada. I return to my previous point that the lack of resolve of this government to enforce the laws of the land has led to a government attempting to make its cigarette prices appear more attractive than those of the smuggled cigarettes.
This strategy founded on the reduction of the tax on tobacco will ultimately lead to an increase in the numbers of smokers in Canada and a subsequent increase in the number of Canadians hospitalized for smoking related illnesses.
Of particular concern to me are the number of adolescent smokers who are going to be created as a result of the implementation of the government strategy in this regard. Even before the reduction of cigarette taxes, some studies have shown that the number of teens taking up smoking is on the rise for a number of reasons, peer pressure probably being one of the biggest causes.
In 1991 statistics showed that 120,000 children and adolescents began to smoke for the first time. With cigarettes selling for $2 and some cents a package in the stores and being available to adolescents, let us not be fooled about the corner store penalties that this government is talking about.
If these adolescents want cigarettes, they will get them, believe me. At $2 a package it makes it all the more attractive for them to buy.
In 1994 the number of adolescents smoking for the first time is going to rise dramatically. Despite the anti-smoking advertising campaigns that the government has talked about, this year the Minister of Health admitted in the House that the government's anti-smoking advertisements targeted at adolescents were not working.
Bill C-32 works in direct contradiction to the Tobacco Sales to Young Persons Act which serves to protect the health of young persons by restricting their access to tobacco in light of the risks associated with the use of tobacco. What a contrast in thought and deed.
On the one hand, the government is saying that it wants to protect the health of young persons regarding the use of tobacco and yet it lowers the price of cigarettes by taking the tax off and making them around $2 a package. It is certainly a contrast.
With these new tax measures, young people will now have greater access to tobacco products because of the cheaper price. There is no doubt about that.
As well, in June 1993 the Department of Finance reported that with respect to cigarettes teenagers are more sensitive to price changes than adults. Further, in 1991 the Department of Health began a program known as the national strategy to reduce tobacco use.
This program started with the premise that tax on tobacco products was a crucial element of reducing tobacco use. In other words, the higher the price, the lower the use. It was a deterrent.
Here again, as we have seen the government's attitude toward criminal justice and law enforcement, this government does not know the meaning of deterrents. Why would it be likely to understand the reasoning of this statement using tobacco tax as a deterrent?
The Minister of Finance is moving a bill that would see the reduction of taxes on cigarettes, a move that will dramatically increase the number of teenage smokers in this country. This bill promotes more smokers, particularly younger ones, and creates substantial increases in health care costs for the future.
It is estimated that 38,000 Canadians die as a result of smoking related diseases.
To help offset the criticism of promoting tobacco by lowering taxes the government has introduced this health promotion surtax on tobacco manufacturers and it will raise about $185 million a year. It is supposed to go toward advertising to deter adolescents from smoking. This is wonderful. It takes a billion dollars off the cigarette taxes and encourages young people to smoke because they are now more affordable and now it puts $185 million back into combating the problem it is creating with lowering the price of cigarettes.
Someone said in this House a few weeks ago that it is like trying to bail out the Titanic with a teacup. This surtax will only apply until 1997. What is it going to do then? Is it going to raise the cigarette taxes back up and create the smuggling problem?
Through Bill C-32 the government promotes the use of highly addictive substances and then as an afterthought creates a tiny program to remove people's addiction to that substance.
It is interesting to note in the red book, the infamous red book, in relation to health care the Liberals promised: "Our approach to problems in our country will be based on our values". I shudder to think that the values of the Liberals are demonstrated in Bill C-32. If their values and their attitude toward health care in this country are demonstrated in Bill C-32, this country is in deep trouble. This is a sad commentary considering the implication Bill C-32 will have on our already strained health care system.
Even within my own riding there are examples of people waiting months and years for needed operations. The health care system has had cutbacks. What is going to happen with the increase in tobacco related illnesses? It is going to swell the lines of people waiting for health care and it is going to create an even bigger backlog to our already strained health care system.
This will be the legacy of this government's action in reducing tobacco taxes; the legacy of a health care system that is going to be far worse than what we are experiencing currently. This will be the legacy of Bill C-32 which this government is trying to put through this House.
The government should have been looking for alternate ways to curb the smuggling of cigarettes. We suggested, but obviously the tobacco lobbyists got to the government first, why not a higher export tax? Why not put on a $22 a carton export tax on cigarettes and raise the price south of the border so they could not be sold cheaper in Canada. No, the lobbyists for the tobacco industry were at work and they got to the people in the government who were making that decision.
Excise Tax ActGovernment Orders
An hon. member
At the very time the U.S. is trying to raise taxes.
Dick Harris Reform Prince George—Bulkley Valley, BC
They could have got the $8 a carton. Big deal, $8 a carton. They take $20 off the price of a carton in Canada and add $8 south of the border-such a deal, that really makes a huge impact.
The U.S. was willing to co-operate with Canadians on this one too but it ignored it. We know why it ignored it. I hope that this new lobbying legislation is going to be effective because we have just seen an example of what happens when lobbyists are not controlled in this country. You can bet that the tobacco lobbyists got to this government before it came up with Bill C-32.
If it had imposed a larger export tax on cigarettes this would have thwarted the ability of smugglers to buy the cigarettes at a cheaper price south of the border, bring them back to Canada and make a tonne of money on them. No, they would not do that. They will not enforce the laws and they will not stand up to the powerful lobbyists who support this party with their influence-I was going to say money, but they would never admit that.
Back in 1992 the government of the day did establish an export tax but it was withdrawn a few months later because of pressure brought to the previous government by the tobacco lobbyists. I would like to meet some of these guys. They must be awful big and walk with clubs because they have a lot of influence on these people across here and they had a lot of influence on the previous government. The magnitude of the smuggling problem today I believe with a little more resolve the government could have stood firm on such attacks. I welcome the hon. member back to hear the truth.
If the government had increased the export tax on cigarettes it would have allowed us to maintain high taxes on tobacco products, discouraging the increase in smoking and reducing the possibility that our hospitals would become unworkable as those with smoking related diseases clog the system.
In league with this strategy the government could also attempt to convince the administration of the United States that higher taxes are in the interest of Canadian and U.S. citizens when it comes to tobacco products. Some of our contraband cigarettes are American made. Higher U.S. taxes coupled with our own export tax would present a significant deterrent to the smuggling problem that confronted this government and which it failed miserably on.
If this government is serious about its concerns over the health care of Canadians it would not in any way be implementing Bill C-32. It never would have come up with this. That is evident because of the questioning we have had to the health minister in the past who simply cannot give us any answers about the future health care system. Why should we expect that the government would be serious about health care concerning Bill C-32?
Studies have shown that lower prices mean more younger smokers, more of the population affected by smoking related diseases. It all adds up to increased health care costs which mean increased taxes for Canadians in the future. It is the taxpayer of this country who is going to have to pay for these increased health care costs.
To a government that has said it would love to reduce taxes in this country, if this is an example of it, again, this country is in a lot of trouble and the Canadian taxpayer under this government is going to see tax freedom day go from about June to three or four weeks later by the time this government is through with its term.
If this is how the government proposes to combat cigarette smuggling, the Reform Party and I must defiantly oppose it.
Don Boudria Liberal Glengarry—Prescott—Russell, ON
Mr. Speaker, I must say as respectfully as I can to the Chair that I have never heard such nonsense.
It is absolutely shameful that a member would chose to make statements such as the ones he has just made in opposition to things that he knows or that he should know. He has indicated today, as he said a few days ago in this House, that he was advocating a military operation to patrol the border between Canada and the United States and an invasion of Akwesasne, a part of my riding.
Those were propositions that same member made last week. I say to all other members of his party that when all of them support the vote this member will take today, that is the proposition they are following. That is exactly what they are standing for like him.
I invite all of them who are reasonable-
Don Boudria Liberal Glengarry—Prescott—Russell, ON
The member may think I should shut up, but the constituents of Glengarry-Prescott-Russell where a lot of this contraband is going on have asked me to be here. They elected me.
No, I will not shut up, particularly on this issue while my constituents are being shot at, while people like those I have just heard are pontificating from afar. No, I will not shut up. I will not stop defending the constituents of Glengarry-Prescott-Russell.
I say to the member across, if he is advocating and it is the Reform Party position that those who speak on behalf of their constituents should shut up, I am glad to hear it on the record. It will make for great stuff in the next election if that is the position of the Reform Party.
I come back to the member's statement, he who is advocating higher taxes. It is a radical position for the Reform Party, I must say, but if he espouses that position I suppose it indicates that there are free votes across the way. There will probably be a few more who think otherwise. He said that some contraband cigarettes were made in the United States. He also said that increasing taxes in the United States at the same time as increasing taxes in Canada would solve the problem.
First, it takes two years to get a tax increase through the United States Senate. I am sure the member knows that because it was indicated last fall.
Second, does the member know that the cigarettes illegally manufactured in the United States would not have been taxed to start with because they were illegal? There was a 7 per cent and growing penetration of counterfeit cigarettes. Those cigarettes bore Canadian brand names and were made in warehouses, some located in Canada, some in the United States, some in New York state, some in southeast Asia and some in eastern Europe. If the member paid any attention to what was said last week in this House surely he would know that.
Does he not know that what he is saying today would not work and that my constituents would have continued to be shot at by thugs? Does he not care?
Dick Harris Reform Prince George—Bulkley Valley, BC
Mr. Speaker, it appears the member opposite wants to get into a shouting contest. I am for that if he wants to do that. When I was talking about considering the military I was talking about enforcing the law.
The member talks so piously about protecting his constituents. That member's government has turned its back on law enforcement. The RCMP clearly defined the areas of smuggling to the government. Unfortunately those areas happened to be primarily on reserve land on the border between the U.S. and Canada, but this government has a hands off policy for the reserves. If there is criminal activity anywhere in this country it should be addressed to the full extent of the law. Apparently this government has special areas where it does not want to enforce the law. I wonder what the reason is for that.
The government says it does not have enough money to patrol the areas of cigarette smuggling. That is the excuse it uses. It says: "You in the Reform Party are talking about spending money for law enforcement". We would be prepared to do that.
I suggested to the hon. member last week on the same subject that if the government does not have enough money to put more police officers in that area, then why not use the military? The government is having a problem in defining the role for the military. I was not talking about a military invasion. I was talking about orderly patrol to stop smugglers from coming across the border. There is a whole lot of difference between that and sending in the tanks and the bazookas that the hon. member is talking about. He tends to continue to blow things out of proportion, but we can disseminate the verbiage coming from the other side.
I talked about higher export taxes on cigarettes. I support that. I will stand by that proposition. I believe that instead of lowering the taxes on cigarettes in Canada to combat smuggling the government should have made the price of the product at the source more expensive so there would not be such a huge profit margin. I know the government could have received the co-operation of the United States.
It all goes back to whether this government has any backbone to enforce the laws that currently exist in Canada. The answer to that is no. It has chosen a back door method which is going to cause considerably more problems to Canada's health care system, instead of standing up and enforcing the laws like it should have. This government has no guts when it comes to enforcing the law. We will not see it in the next four years no matter what the justice minister says. This is evidence of what is to come.
Bob Speller Liberal Haldimand—Norfolk, ON
Mr. Speaker, I too am somewhat amazed that the Reform Party is supporting high taxes.
Bob Speller Liberal Haldimand—Norfolk, ON
And military invasions, whatever. However, I want to say to the hon. member who talks about enforcement of laws, before he came out with his proposal I am wondering whether or not he talked to the RCMP to see how feasible it was.
We did and the RCMP told us that this problem had grown so far out of proportion and had become so big that a million people could have been put out there to enforce it and the problem still would not have been resolved.
In fact we had to go beyond that. We took the common sense approach and attacked it from both ends. We said we were going to have to do more enforcement. We were going to have to make sure the penalties were increased. We were going to have to nip it in the bud and make sure the incentive to smuggle was not there. That is why we dropped the taxes.
In terms of lobbyists and the export tax I am surprised the Reform Party would support an export tax. All an export tax does is export Canadian jobs to the United States. That is very clear and that is why the Tories in the last government got rid of that export tax. They realized it would just export jobs to the United States taken by itself.
The lobbyists he talks about who lobbied against it were the Canadian farmers. They were the farmers. They were the people of the soil who came to government through me and lobbied very strongly against that aspect. They were the ones who lobbied very strongly for this tax decrease. They won that battle, not because they had high paid lobbyists on their behalf but because they had members of Parliament who listened to their concerns.
Dick Harris Reform Prince George—Bulkley Valley, BC
Mr. Speaker, I will try to settle down a little bit here. This member has such a nice tone to his voice I cannot see any point in arguing with him.
I would like to point out that his statement about the cigarette smuggling was so far out of proportion it was almost impossible to control. I would like to humbly suggest that if this government had reacted when cigarette smuggling was in its infancy and the problem was much smaller, we would not have had a problem that was so far out of proportion.
The present government will say it started in the previous government. Undoubtedly it did and the previous government failed to address it as well. But when this government took over in October, the problem was not as large as it was later on in the season. The government had the opportunity back then when it first took over. It knew about the problem and could have done something then. It did not and the problem grew. What does it do? It goes into competition with the cigarette smugglers trying to put them out of business. That is not the way to run a railroad or a country.
Ian McClelland Reform Edmonton Southwest, AB
Mr. Speaker, I am delighted to add a few words to this very important debate.
I am going to be speaking in opposition to the bill specifically to that part which deals with the excise tax on cigarettes. This is an omnibus bill. It includes quite a number of other issues most of which make sense and if they were separated I would support.
I do have to acknowledge at the beginning of my dissertation that the Liberal government of the day did not start this mess, they inherited it. My objection is how they handled the mess they inherited. We acknowledge the fact it was the Conservative government that did not have the backbone to deal with the problem when it was a small one so it became a big problem.
This extremely difficult problem was exacerbated by the fact that day after day Bloc Quebecois members would stand in this House and deride the government for doing nothing about this, all the while raising the temperature of the whole debate. This put it on the front pages of every newspaper and raised the ante, forcing the government hand to react. It had to do something. On balance the necessity to do something caused the government to come up with half a loaf.
The Conservative government when confronted with this dilemma said it would put an export tax on a carton of cigarettes, thereby taking the profit out of smuggling. It put an export tax on of about $8 a carton. Shortly after that the tobacco industry told the government that if it did not remove the export tax the industry would export itself south of the border. Canadian producers would lose their jobs and Canadian manufacturing workers would lose their jobs. The net result would be net, net, net losses to Canada.
The Conservative government of the day said to the tobacco industry: "You have been pretty responsible in everything you have done to date so we will take you at your word. We will reduce the tax. We will take it off and we will expect you to be self-policing". What a brainwave that was. It showed once again how brain dead the Conservatives were. The net result was that tobacco smuggling took on unprecedented proportions as the price of cigarettes went up.
There are products which have nothing to do with cigarettes that we in Canada pay a particularly high price for. Milk, eggs, cheese, butter, and chickens: All of these products are protected by marketing boards. As a result, Canadians pay a higher price than the Americans for these products. What do you suppose would happen if we started selling chickens out of the back of a truck in a shopping mall? Within about 30 seconds we would be in the hoosegow.
What is the difference between selling chickens we are paying too much for, or selling eggs we are paying too much for, or cheese, or butter, and selling cigarettes? The difference is that the cigarettes were coming through a reserve. There had been a very tense and difficult time a few years earlier in that same area. No one wanted to ruffle any feathers. Therefore the laws of Canada were not enforced.
The situation is that a noxious product which is highly addictive, and most addictive to young people, is made far more affordable to the very people most susceptible to the noxious aspects of the product.
There is a direct correlation between price and consumption. It is called price elasticity. It is a fact of life in marketing that is well known and well documented the world over: the lower the price, the higher the consumption; the higher the price, the lower the consumption. That is an irrefutable, indisputable fact. What do we accomplish if we lower the price of this noxious weed by half? We make it far more affordable, far more usable by the very people we do not want to become addicted.
I would like to quote some information from the Canadian Cancer Society. It has gleaned these statistics from Statistics Canada. Speaking to the issue of tobacco taxes and consumption: "The retail price of tobacco increased dramatically in the 1980s as federal and provincial governments increased tobacco tax rates. This led to an unprecedented decline in consumption, even factoring in contraband sales".
As an indication of exactly what happened from about 1980 to 1992, in 1980 the per capita consumption of cigarettes in Canada was 2,900 cigarettes. In 1992, as a direct result of increased cost and even factoring in the sale of contraband cigarettes, the consumption was down to 1,500 cigarettes per capita, almost half. It was a reduction of almost 50 per cent.
What led to this? There were other things which we will get to that led to this. The primary reason was because cigarettes were pricing themselves out of the market as a direct result of the taxes imposed by governments for the specific purpose of reducing consumption. The decline was even more dramatic among teenagers. Between 1979 and 1991 the percentage of Canadians aged 15 to 19 who reported they were smokers declined from 46.5 per cent to 22 per cent, more than a 50 per cent reduction in the number of teenagers who smoked.
The federal government acknowledges the effect taxation can have on smoking among youth. Then finance minister Michael Wilson stated in his 1991 budget that studies show tobacco taxes are particularly important in discouraging younger Canadians from smoking. As a result of the tax increases included over those years, it is estimated that there will be 100,000 fewer teenaged smokers as a result.
We do not even know what the cumulative effect is of this reduction of cigarette smoking at the teenage years, but just imagine what it is later in life. Because it is a statistically proven fact that where you have a home where both parents or one parent smokes, the incidence of children smoking is significantly higher. We have a cumulative effect of the reduction of people smoking, particularly adults and teenagers.
Clearly tobacco tax increases in and of themselves are not the only reason for the reduction in consumption. The ban on tobacco advertising, improved health warnings on cigarette packages, public education and the increased restriction of smoking in workplaces and public places have all contributed to the decline. The measures act synergistically, together.
If you remove the single most important impediment to cigarette smoking, price, what does it do to all the rest of them? Then you come in and say: "My goodness, what are we going to do? Let us go to plain packaging on cigarettes".
Plain packaging on cigarettes is not going to hurt, it is going to help in preventing cigarette companies being able to market and merchandise their product. When you decrease the price that much everything else that we do is just whistling in the wind. If we as a nation have decided that to reduce smoking, particularly among the young, is an important national objective, then we must pursue that at all costs. Those tobacco farmers who are impacted by that must accept the fact that the industry is changing and that we will require fewer tobacco farmers in the
future. To my knowledge, the industry was very much aware of that and many tobacco farmers were converting to other crops.
Just because we have people in Canada manufacturing a product which is known to cause almost 40,000 deaths per year due to lung cancer, more than the combined deaths of AIDS, traffic accidents, suicides and everything else put together, why should we put the concerns of those farmers who know the writing is on the wall ahead of the health of the country as a whole?
The government is talking about imposing gun controls on the nation, little realizing that every time someone puts a cigarette in their mouth they are playing Russian roulette with their lives and the lives of everyone around them through secondhand noxious smoke. There is a hypocrisy here.
This essentially is a law and order issue. If we accept the rationale that because we have lawlessness we must therefore reduce the impediment for Canadians to obey the law, if it is non-enforceable then change the law, then maybe we could carry the same logic to removing speed limits. Then we would not have anybody breaking the law by speeding.
If the law is wrong, then it either should not have been written in the first place or it needs to be changed so that Canadians do not feel a sense of dislocation with the law makers who actually promulgate the laws in the first place. If we as law makers promulgate laws that will not be adhered to or are afraid to enforce laws that are on the books, that brings the very notion of law abiding citizens and the responsibility for obeying the law into disrepute. One leads to another.
We wonder why we have lawlessness in our society. We wonder why we have a rash of the perception and the reality of lawlessness in our young people. If we as law makers do not set the example by saying: "Look, this is the law. We are all going to obey it. It is the same law for everyone, no matter who you are and where you live in the country", why should anyone obey the laws except those laws that they agree with?
As I bring this to a conclusion, I would like to make a couple of suggestions. We in Canada might consider the experience of Italy which had a problem similar to ours. If I may I will read this: "The Canadian government might be wise to copycat the Italian example to deal with smuggling. In Italy to prevent tobacco companies from selling cigarettes to the contraband market the government threatened to suspend all legitimate sales of the brand particular to that company until the illegal tobacco products were no longer being sold to the contraband market".
That is coming down hard on those very tobacco producers who said that they were going to be self-policing. We could do the same thing and give them another nudge. This would effectively deal with the contraband problem and would not in any way conflict with the charter or with any of our trade agreements.
The government is in a very difficult position on this bill, between a rock and a hard place. It was confronted with the problem of the lawlessness that was going on when it took office. It was compounded by the antics of the Bloc in raising the issue to a fever pitch and by the support of people in government to those who are breaking the law by selling contraband cigarettes or turning a blind eye.
It had to be dealt with before it got totally out of hand. To give credit where credit is due, it did deal with it. Now the problem is going to be what will this government do to pick up the pieces.
Will this government by the end of its mandate return tobacco taxes to their original level whether as excise or however it does it? Will this government when that time occurs ensure that those who would sell contraband tobacco and break the laws of Canada no matter where they live would be punished? When this occasion arises with this product or with any other illegal contraband product, will the government turn a blind eye? Will it have an ostrich attitude and pretend the problem does not exist until it becomes a problem that cannot be handled by enforcing the law and therefore change the law in order to accommodate lawlessness, the law breakers and the tobacco companies? That is where the shame lies in this law.
Bob Speller Liberal Haldimand—Norfolk, ON
Mr. Speaker, I took interest in the hon. member's statements on this issue. I thank the hon. member for his statements. They were very interesting. I will make sure that my constituents, the farmers in my area, hear those statements because I think it is important for them to know where the Reform Party stands on this issue.
I am somewhat concerned about the fact that the Reform Party is saying that this government should not listen to tobacco farmers because they are producing a product that the Reform Party does not like.
I will go back and give a little history on this. I know hon. members across will be interested in this. These farmers got into this a number of years ago actually because of the support of government. The government encouraged them to go into these lands and grow tobacco. Many of these farmers have been there for generations. It is not easy just picking up and moving to another commodity, moving into another group.
One may be able to do that in western Canada but their critic for agriculture would realize that it takes a big cost just changing from one commodity to another. We just cannot turn tobacco farmers into another type of farmer. These farms are on average about 85 acre farms. Yes, some of them have diversified. Some of them have gone into ginseng, horticulture crops and some other crops. In fact over the last 10 years we have seen half of the farmers go, but a lot of them could not do that. They ended up on unemployment lines or welfare because there are not a lot of alternatives. One cannot turn an 85 acre farm into
just another thriving farm. The alternatives just are not there. There are not a lot of other crops frankly that can grow in those areas other than tobacco and certain crops. They were encouraged to go into other crops. In fact those markets flooded. There was not a lot of opportunity to sell the produce that they had worked so hard for.
These families have been there, as I said, for generations and do not know how to farm in a lot of other areas. It is not easy to do it. Governments in the past have tried but frankly they have failed in a lot of different areas. We have seen a lot of the pressures that many families have. We have seen a very dramatic increase in suicides in my area because the troubles have been very difficult for tobacco farmers. We just cannot say that on two points they can all of a sudden move into other areas because the opportunities are not there.
We cannot say that governments should not listen seriously to the concerns of these farmers because first and foremost the government encouraged them to get in there and, second, they are human beings and Canadians and people and they should be listened to.
The hon. member talked about Italy. I know that came from one of the anti-smoking groups. It put something like that out. It is a little different here. The licences under which tobacco companies manufacture are not Canadian. They are international. They can easily take that Virginia flue cured tobacco, grow that same tobacco in the United States and easily export those manufactured cigarettes to Canada. There are no trade rules in the world that a country could bring in to stop that.
It is a very, very easy process for them to take their business south, leaving Canada. Who would lose? The thousands and thousands of Canadian people who work in that industry and the Canadian tobacco producers, the 1,200 families in those communities, help support small town and rural southwestern Ontario and in other parts of this country. It is not that easy to do that. It is just not easy to say: "Okay, there is a solution in Italy and they solved it". It is a lot more complex than the member suggests.
There was a problem, it existed and I thank the hon. member for outlining that but we had to do something about it. There was not any easy solution. As the hon. member knows, sometimes before you get elected when you run through campaigns you have all the answers but when you get in here and you face the realities of governing and you face the realities of trying to solve some of these complex problems, trying to deal with the complexities of this country and the different interests involved, and at the same time trying to listen to Canadians and trying to make sure that what you are doing represents their views, it is not always easy.
We saw a problem. We wanted to make sure that smuggling problem stopped, that the whole underground economy came under control because we felt that was a serious problem and we felt that the only way to do it was to bring in legislation like this and to take a multi-faceted approach to the problem. There is not one solution to this problem, Mr. Speaker, as you know, coming from the area that you do. You have dealt with this problem over the years. The problem did not start on October 26. The problem was there for a number of years. We knew about it. We worked on it and I thought we reacted pretty quickly toward solving the problem.
Ian McClelland Reform Edmonton Southwest, AB
Mr. Speaker, I thank my colleague for his observations from across the aisle.
I do acknowledge how difficult it is for a farmer or for anyone else for that matter when they see their livelihood changing in front of their eyes and they have to retool their lives in order to accommodate changing circumstances.
This does not happen exclusively in the agricultural industry. It happens all across the nation. It has happened in Ontario particularly over these last four or five years as all aspects of Canadian manufacturing, particularly that in Ontario, have been struggling to retool over these last few years. We find that as we go down the path of life sometimes the road changes, the path changes, and we have to change with it.
The hon. member mentioned that over 50 per cent of the people previously engaged in farming, tobacco farming, are no longer doing so because they recognize that this is an industry at least in Canada that has a sunset. Smoking is less and less socially acceptable and it will eventually be banned virtually everywhere except outside because people who are the victims of cigarette smoking, the unintended victims through second hand smoke, will not tolerate it anymore. You cannot for instance smoke in the precincts of Parliament Hill or any federal government building.
The Alberta government has legislation before it today to ban smoking in any public place, including the workplace. If you are in California you can hardly even smoke outside which begs the question why on earth are we so upset about the noxious fumes from car exhaust when we are walking around inhaling them?
I recognize my hon. colleague's concern for his constituents or any farmer, particularly the tobacco farmers who are living with the imminent demise of their industry. Make no mistake, it may not happen this year, it may not happen next year, but it will happen. These people are going to have to convert their livelihood. It is no longer socially acceptable in Canada to smoke.
If I were a banker I would not spend a whole lot of time figuring out a loan to allow anybody to get into the tobacco business even given this setback to the anti-smoking people in Canada.
I do recognize how difficult it is for those who are faced with the imminent change in their lives driven by this and it is a generational thing.
To my hon. colleague, I am cognizant of the problems he raises and I have sympathy for the people who must make those life decisions as farmers. They are decisions they must face and they must be prepared to make them.
Keith Martin Reform Esquimalt—Juan de Fuca, BC
Mr. Speaker, I stand before you in a very grave fashion to speak on Bill C-32, the act to amend the Excise Tax Act, the Excise Act and the Income Tax Act.
This reduction in taxes to cigarettes is the single most disastrous act of sabotage to the health of the Canadian people which has ever been enacted by any government in the history of this country. This is not an understatement. Smoking kills at least 26,000 individuals per year.
The lowering of taxes committed thousands of youth in this country to smoke per year, ones who would not normally do that, and results in a dramatic increase in consumption.
I have some data that just came out from the Addiction Research Foundation. There was, as has been said before, a long term decline in tobacco use but this stopped in 1994. Smoking in Ontario increased in the few short months that the tobacco taxes have decreased from 22 per cent to 26 per cent.
Among women that increase is particularly dramatic. It has gone from 19 per cent to 25 per cent in the last four months. A 10 per cent decrease in cost results in a 14 per cent increase in consumption particularly among the youth and an 8 per cent increase in consumption among the rest of the adult population.
Some say that this decline in tobacco taxes has resulted in at least 800,000 new smokers in this country, of whom 175,000 are youth. These numbers translate on a personal basis to disasters that I cannot tell members enough about. They result in often fatal diseases such as lung cancer, heart disease and a myriad of other malignancies.
They result in lives lost and the untold pain and suffering by people who are afflicted by these diseases and also to the families and friends of the loved ones who unfortunately succumb to these diseases.
To put it in more impersonal terms, the decrease in tobacco consumption will cause a decrease in gross domestic product and increase in medical costs. Nobody has ever been able to show us the increase in costs that is going to result from the decline in tobacco taxes.
I can tell members from working as a health care professional that the cost to our system is in the billions of dollars. In 1982 the cost of tobacco consumption in this country was $7 billion, or $2 billion more than the total expenditures on tobacco including the taxes.
A decrease in consumption would decrease revenues from tobacco taxes, this is true, but it will greatly decrease the cost to the taxpayers of this country by decreasing health costs and also to avoid the loss in gross domestic product from job losses and a decrease in losses from fires caused by smoking.
The original idea to decrease tobacco taxes came as a response to the rampant tobacco smuggling that was occurring between Canada and the United States. I sympathize with the government completely on this issue.
This is occurring especially in central Canada, particularly in the three native reserves, the Kahnawake, Kanesatake and Akwesasne reserves that straddle the border. The decrease in tobacco taxes was also strongly supported and promoted by none other than the Tobacco Manufacturers' Association.
To give an idea of the scope of this problem, at the height of tobacco smuggling there were 35 cartons of cigarettes smuggled into the reserves per person per day, which is an incredible problem.
The natives claim-I do not have any disagreement with this whatsoever-that they have an inherent right to trade across their border. I would not dispute this at all, certainly for their own needs. However, when that trade involves the distribution of a commodity to the rest of Canada which by-passes the laws, results in smuggling and results in the death of Canadians all over this country, native and non-native, I have a big problem with that.
I have no sympathy at all for the people who are involved in it. I believe that this criminal conduct should be dealt with with the full force of the law as it must be dealt with in any part of this country. There has been a great reluctance to deal with this issue head on.
A fear of confrontation permeates the whole situation as much of this activity is with organized crime. Illegal weapons are rampant in the whole situation. I know that this is a dangerous situation but it is also an illegal one. Like it or not, as a cancer in our midst that needs to be eradicated on behalf of all law-abiding citizens in this country, native and non-native alike, we have to deal with this situation and deal with it now.
Now that we have defined the problem of rampant smuggling of tobacco products into Canada from the United States, let us look at some constructive solutions that would obviate the need to lower tobacco taxes.
I believe the first and foremost solution which has been proven to work is the export tax. I applaud the government in
instituting its export tax. In February 1992 the then government instituted a tobacco export tax of $8. In six weeks it reduced smuggling by 70 per cent. However, under pressure from the tobacco manufacturers, the government of the day caved in and removed it. I applaud this government again for instituting this tax.
I also applaud the investment in education but I would caution this government to spend its money wisely. It is not worthwhile investing money in 30 and 40-year olds who are addicted to tobacco to stop smoking. I would start at the ages of 6, 7 and 8, and please utilize your money carefully in that age group. It will pay off in spades in the long run.
Also, if you are going to institute education in teenagers, which must be done, do not tell them that they are going to get lung cancer 20 years down the road, do not show them a bunch of nerdy teenagers who look like they jumped out of a Rosedale high school playing basketball and turning into cigarettes. Tell them that it will affect their looks, address their vanity, address narcissism, address them on a personal basis. That is the way to address education in teenagers.
Getting back to the enforcement aspect, we must not accept a double standard of law enforcement in Canada, one for natives and one for non-natives. The problem of tobacco smuggling is one that extends far beyond the immediate problem of cigarettes but, as I said before, involves organized crime, the illegal smuggling of drugs, weapons and liquor. It is something that affects not only the reserves but also the rest of Canada. It is everybody's responsibility. Also, it does not serve the law-abiding citizens who live on the reserves. Nobody is addressing that problem at all, nobody is speaking out for them.
It is an affront to the citizens of this country and the people on the reserves this affects. We must provide our enforcement officers with the equipment and training to deal with this problem expeditiously, at any cost. Law is law, you either have it or you do not.
I would also ensure that we have an increase in the penalties for smuggling. Again, I applaud the government in its efforts toward this end. I also urge the judiciary to enforce these laws that have been brought in by the government to the fullest of its abilities.
As I said before, I strongly implore the government to bring the tobacco taxes back where they were prior to February 8. I instituted private member's motion 295 that has been selected, requesting that tobacco taxes be where they were and bring them back to pre-February 8, 1994 levels.
It is interesting to reflect right now on what is happening in the United States. It has instituted taxes and made changes to make it such that tobacco and cigarettes in Canada are now cheaper than in the United States, in Ontario and in Quebec.
I would ask everybody in this House to please reflect carefully on this bill. I ask them to look at their children and look at their grandchildren and think of the tens of thousands of children who are going to be subjected to starting up smoking and who are going to suffer the pain and death of them and their loved ones by taking up this horrible habit.
This bill is reprehensible and we have alternative solutions. We have alternative solutions to address the smuggling issue that are effective, and so there is no need whatsoever for this government to lower the taxes on tobacco.
Bring in these other issues, enforce them to the fullest ability and do not drop the tobacco taxes.
Bob Speller Liberal Haldimand—Norfolk, ON
Mr. Speaker, a short intervention because I was not quite clear on something. The hon. member came forward with some figures in terms of sales of cigarettes. I think he suggested that smoking was up in the past four months and I am wondering if that was based on sales. It is hard to determine, especially in the smuggling area, actually how many cigarettes people are smoking because they were buying them illegally. We can determine what was being sold either through the retail sector or we can just take a survey and say: "Are you smoking, did you smoke today, did you smoke yesterday, did you smoke a year ago?". That is important because government figures show that production is down and for the companies producing cigarettes the number of products they are producing since this bill came into effect is down. Government figures also suggest that it is down. People are not buying as many cigarettes. The numbers are down.
I wonder how that juxtaposes with what the hon. member said about his figures saying more people are smoking. The figures just do not show that.
Keith Martin Reform Esquimalt—Juan de Fuca, BC
Mr. Speaker, I thank the member for his question. It brings up some good points.
There are two things. First, consumption globally is up. I do not know what statistics the hon. member is looking at but I would be more than happy to speak with him privately to see what he has. The figures I have show the exact opposite. Global consumption is up, particularly in youth. Youth consumption is up dramatically.
As I said before, in terms of youth smoking it is not plain packaging that is the important issue. Cost is the single most important determining factor in consumption in youth. It affects how much they smoke and it affects even how many of them are going to start to smoke.
Again, if it is cost we are looking at as the single most important determining factor, it is unthinkable, reprehensible, immoral and unjustifiable for the House to pass a bill that will lower tobacco costs to children and commit tens of thousands of
them to take up this habit which will ultimately result in a decline in their age, an increase in their mortality and morbidity.
Jim Abbott Reform Kootenay East, BC
Mr. Speaker, I have been interested in listening to this debate. As the House has heard there is actually a small debate even within the Reform caucus, as I would suspect there might be within the Liberal caucus and for that matter the BQ.
I find myself to be in a very ambivalent position on this one. It is very difficult. I am looking forward to my colleague being able to assist me with the concept. I suggest we ended up with the taxes as a result of the fact that they were called sin taxes and were on a commodity that people wanted to consume. Therefore for the longest period of time consecutive governments saw it as being a revenue source. After all that is what taxation is. They kept on adding and adding taxes to this particular commodity. As a result we ended up with the situation that we have all acknowledged, the smuggling problem.
When the whole issue was being looked at we also discovered the connection that my colleague from Esquimalt-Juan de Fuca has so ably put forward. We discovered the connection between price and the fact that if the price goes down, then we are undoubtedly going to end up with higher consumption. It is only a straight case of the law of supply and demand.
I have to respect my Reform Party colleague because after all he is a medical practitioner and has seen the results of cancer and other respiratory diseases with respect to this particular product. Undoubtedly I have every respect in the world for the emotion that he brings to this question.
Is it right, is it fair, is it proper to be trying to legislate people's behaviour on the basis of taxation? Is taxation not really a source of revenue and are we not mixing up principles here in trying to legislate people's behaviour by increasing a revenue source? It does not seem like quite a match there. Perhaps my colleague could help me.
Keith Martin Reform Esquimalt—Juan de Fuca, BC
I thank the hon. member for his question. It brings up a very important philosophical question that has been discussed at length privately.
I do not believe Parliament should legislate the behaviour of an adult population. However, we are dealing with legislation that is going to affect children more than anyone else, children who do not have the objectiveness and experience that adults have.
Also, the product that we are talking about is something that is going to affect them in a horrible, detrimental fashion, as my hon. colleague just mentioned a few moments ago. It is going to kill them. It is going to affect them in horrible ways, in diseases and in morbidity.
Smoking tobacco, a deadly product, is exempt from that because we are dealing with children, as I said before, who cannot make necessarily an objective decision for themselves. The cost is also another issue. We lose revenues by bringing the tobacco costs down. However, on the other hand, the cost to society globally is also very much increased in terms of health costs, fires and loss to gross domestic product.
When people take up cigarette smoking it is not something that only affects them individually. The consequences of their behaviour is something that is borne out by all of us collectively as a society. As a result of that I do think we have a say in the matter as a society and as a House.
Leon Benoit Reform Vegreville, AB
Mr. Speaker, I am here today to address Bill C-32, an act to amend the Excise Tax Act and the Income Tax Act. I will concentrate on the section of Bill C-32 proposing a reduction in tobacco taxes and outline my reasons for opposing this legislation.
There are some other aspects of this bill which I can support and which some Reformers certainly support, but my colleagues have and will continue to touch on these areas and I will leave it to them.
Late June of this year has been declared tax freedom day by the Fraser Institute. From that day forward Canadians will be working for themselves instead of for government. We can all agree that the tax burden on Canadians is too high and I believe that all Canadians are looking for tax relief. However, I question whether Bill C-32 is the way to lower taxes for Canadians.
As a Reformer I want taxes reduced. I want taxes reduced for all Canadians and not just for a select group which is what the effect will be of this bill. I do not think you could find many other pieces of legislation that propose tax reductions, possibly none, that I as a Reformer would not support. However, Bill C-32, in spite of calling for a reduction in taxes, has hit at the very last place that taxes should be reduced.
I would like to talk about the problems with this legislation and later I will talk about, in the Reform tradition, some possible solutions that are better than this legislation.
This legislation has been introduced in an effort to control the problem of smuggling, not with the intention of easing the tax burden. The government refused to control the smuggling problem, particularly in the areas of eastern Ontario and across the U.S.-Quebec border on native reserves. My colleagues have talked about the lack of action on the part of the government in dealing with smuggling across the U.S.-Canada border in the area of certain reserves.
The criminal element of Canada has been allowed to get away with its crime of smuggling because the government is afraid to intervene in any meaningful way. This is wrong. Lowering tobacco taxes may reduce smuggling from the United States and may reduce the smuggling of cigarettes. Smugglers will just turn their efforts to smuggling other commodities.
I would like the government to think about this. If smugglers are limited by this change in smuggling cigarettes-it will possibly have that effect-then what of smuggling liquor, a similar commodity with a high sin tax? What about smuggling narcotics, guns? What action will the government take next when smuggling liquor becomes a major problem, when liquor is being smuggled across the U.S.-Canada border? What action will the government take?
I ask that question and I would certainly hope that members of the governing party will think about it and will answer it for themselves. If this legislation passes, we will certainly all be having to answer this question and not too far down the road. How are we going to deal with the problem of smuggling alcohol? What of narcotics and guns?
We already know to some extent the attitude that the government has in dealing with guns. It is not a healthy approach. It is not the direct approach that we would all like but I will talk about that briefly later when connecting it to this issue.
This legislation does not in any way solve the smuggling problem nor does it set a precedent to deal with any future problems should they arise. If it does set a precedent, then I am more concerned than I am now. If the precedent the government has set in dealing with future smuggling problems is to lower the tax and do anything but deal with that problem head on, then it is a bad precedent. That is another reason we oppose this legislation. Once again, it is an example of government dodging its responsibility.
Bill C-32 will encourage young people to smoke because it makes tobacco products more affordable to them. This is irrefutable and my colleagues and others have talked about this already. It is very clear that the anti-smoking campaign aimed at young smokers has not worked. It has been ineffective. Now that cigarettes have become more affordable, many young people will be taking up smoking.
I would like to relate an experience to the House. I was around 12 years old when my bother and I obtained cigarettes.
Leon Benoit Reform Vegreville, AB
I know it is a shame. We went out behind the calf pens. We used to buy these Holstein calves and at chore time, after feeding these calves and dealing with the cows, we would go out there and sneak cigarettes.
I believe the only thing that stopped my brother and me from smoking and from getting caught up in this terrible habit was the cost factor. It was the cost factor that stopped my brother and me from pursuing this terrible habit.
This legislation therefore will be totally ineffective and by lowering the cost of cigarettes to everyone right across the country it will increase the problem of young people smoking. In a study examining the effects of the reduction of tobacco taxes in Canada-
Excise Tax ActGovernment Orders
The Speaker
The hon. member will of course have the floor when we resume debate on this bill. It being 2 p.m., pursuant to Standing Order 30(5) the House will now proceed to Statements by Members pursuant to Standing Order 31.
Bernie Collins Liberal Souris—Moose Mountain, SK
Mr. Speaker, Edward George McCullough passed away peacefully on June 17, 1994 at his Cannington Lake home with his wife Madge by his side.
Ed was born in 1909 in Moose Jaw and grew up and farmed at Ponteix where his parents homesteaded. He and Madge moved to their farm in the Moose Mountains during the 1930s. He farmed there for the rest of his life, enjoying in his words "the most beautiful spot in the world".
He was keenly interested in politics and served as a CCF member of Parliament for the Souris-Cannington constituency during the 1940s and 1950s. He had a busy and fulfilling life. He was involved in the co-operative movement, the wheat pool and community affairs.
His family and friends were very important to him. He will be remembered kindly by all who knew him. A great Canadian who contributed greatly to his country, we remember Edward George McCullough.