Mr. Speaker, it is with great pleasure that I rise to speak at second reading of Bill C-90. This is an important bill in that it will give legislative effect to excise tax changes announced earlier this year, including measures that were contained in the budget of February 27, 1995.
The key budget measures in this legislation are: first, changes to the air transportation tax that will recover a greater proportion of the cost of providing air transportation services and facilities.
Second, an increase in the rate of excise tax on gasoline equal to 1.5 cents per litre that will assist the government in meeting its deficit reduction targets.
Third, amendments to the marking requirements for tobacco products for sale in Prince Edward Island that will phase out the sale of black stock or unmarked tobacco products and allow for the sale of Nova Scotia marked tobacco products.
Last, changes to the seizure and notification provisions in respect of offences under the Excise Act that will improve the efficiency and effectiveness of enforcement activities.
The bill also contains important changes in respect of excise tax rates for tobacco products for sale in Quebec, Ontario and Prince Edward Island. The amendments contained in the bill will give legislative effect to a modest federal excise tax increases that were announced earlier this year in conjunction with provincial tobacco tax increases in these three provinces.
These tax increases follow the success to date of the national action plan to combat smuggling in significantly reducing contraband tobacco activity and restoring the domestic tobacco market to legitimate Canadian wholesalers and retailers.
Let me begin by addressing the key budget features that are implemented by Bill C-90, the air transportation tax. As part of the government's efforts to meet its deficit reduction targets the budget of February 27, 1995 proposed changes to the air transportation tax that will recover a greater proportion of the cost of providing air transportation services and facilities.
In accordance with this proposal the bill contains amendments to the Excise Tax Act that will increase the maximum air transportation tax on higher priced domestic and transborder air travel and the tax on international air travel purchased in Canada from $50 to $55.
In addition, the maximum tax on transborder air travel subject to the United States' 10 per cent air transportation tax and the tax on international air travel purchased outside Canada will increase from $25 to $27.50. These new rates will apply to air travel purchased on or after May 1, 1995. Where air travel is purchased outside Canada and the tax is not prepaid, the new rates will apply to air travel which includes an international departure from Canada on or after May 1.
These changes to the air transportation tax will generate additional revenues of $27 million in the 1995-96 fiscal year and $33 million in the 1996-97 fiscal year.
Also as part of the government's efforts to meet its deficit reduction targets, the budget of February 17, 1995 proposed to increase the rate of excise tax on leaded and unleaded gasoline and aviation gasoline by 1.5 cents per litre.
To give legislative effect to the proposals Bill C-90 contains amendments to the Excise Tax Act that will increase the excise tax on leaded gas and aviation gasoline from 9.5 cents per litre to 11.0 cents per litre and the excise tax on unleaded gasoline and aviation gasoline from 8.5 cents to 10 cents per litre.
These changes apply to sales of gasoline and aviation gasoline after February 27, 1995 and will raise an additional $500 million per fiscal year. At the same time I would like to note that the federal excise tax on diesel fuel will not be increased.
The budget of February 27, 1995 also announced the government's intention to phase out the sale of black stock or unmarked tobacco products and authorize the sale of Nova Scotia marked tobacco products in Prince Edward Island. These changes are being
undertaken at the request of and pursuant to an agreement between the governments of Nova Scotia and Prince Edward Island concerning the use of Nova Scotia marked tobacco products.
In order to give effect to this agreement Bill C-90 contains a series of technical amendments to the taxation, offence and rebate provisions of the Excise Tax Act. These amendments will effectively phase out the sale of black stock tobacco products and authorize the sale of Nova Scotia marked tobacco products in Prince Edward Island at the reduced rate of federal excise taxes that are applicable in Prince Edward Island. These changes will be effective on royal assent to the bill.
The final budget related measure contained in this bill involves changes to the seizure and notification provisions of the Excise Act. The Excise Act currently provides that officers must seize any vehicle used to transport alcohol and tobacco in contravention of the Excise Act even where relatively minor amounts of contraband are discovered. In the past this provision has created enforcement difficulties by forcing officers to seize vehicles in situations where seizure is neither a practical nor an appropriate remedy. To rectify the situation this bill amends the Excise Act to provide officers with the discretion to use the power to seize vehicles that are used to transport contraband alcohol and tobacco.
The Excise Act will also be amended to require that where officers have evidence that a person other than the person from whom the vehicle is seized has an ownership or similar interest in a vehicle, the officers shall take reasonable efforts to ensure that notification of seizure is sent to the last known address of that person.
Both of these measures will operate to improve the efficiency and effectiveness of enforcement activity.
Finally, Bill C-90 contains important changes to the excise tax rates for tobacco products for sale in Quebec, Ontario and Prince Edward Island. As my hon. colleagues are aware, the national action plan to combat smuggling was announced by the Prime Minister on February 8, 1994. The combination of initiatives launched under this plan, including increased enforcement resources, tobacco tax changes and the special surtax on tobacco manufacturers has proven effective in significantly reducing contraband tobacco activity and restoring the domestic tobacco market to legitimate wholesalers and retailers.
As a result of these efforts, the government has been able to take important first steps toward the long term restoration of uniform federal excise tax rates for tobacco products across Canada.
In Quebec and Ontario federal excise tax rates are being increased by 60 cents per carton of 200 cigarettes, while in Prince Edward Island excise taxes are being increased by $1 per carton of 200 cigarettes and 32 cents per 200 tobacco sticks.
It is important to note that these federal excise tax increases are being undertaken in conjunction with provincial tobacco tax increases in the three provinces. These joint federal-provincial tax increases follow the scheme of matching tax reductions announced under the national action plan and reinforce the importance of co-ordinated, federal-provincial action to deal effectively with contraband activity.
The excise tax increases in respect of cigarettes for sale in Quebec and Ontario are effective February 18, 1995 while the increases in respect of tobacco sticks and cigarettes for sale in Prince Edward Island are effective April 1, 1995. These changes will generate an additional $65 million in federal revenues on a fiscal year basis.
In conclusion, and as members can tell from the outline of this speech, Bill C-90 is an important bill. This bill enacts a number of key revenue raising measures contained in the budget of February 27, 1995.
While I would note that the budget delivered on that date emphasizes reductions in spending by a margin of seven to one over tax increases, the measures contained in this bill relating to the air transportation tax and the excise tax on gasoline are key components of the government's commitment to both increased cost recovery and meeting its deficit reduction targets.
Other measures, such as the amendments to the seizure and notification provisions of the Excise Act will improve the delivery of enforcement activity, while changes to the tobacco marking scheme for Prince Edward Island will allow for greater efficiency in serving the Prince Edward Island market.
Finally, the changes to the excise tax rate for tobacco products for sale in Quebec, Ontario and Prince Edward Island emphasizes the success to date of a national action plan to combat smuggling and to raise important, additional revenue for the government.
As a result, I would urge my colleagues to give speedy passage to this bill.