Mr. Speaker, having worked with the member for Kings—Hants, I know he does not cheat nor does he run into the washroom and grab a quick smoke every now and then. I congratulate him. I am sure his colleague will see the light of way in due course.
I do not blame Canadians for being confused with regard to parts of this issue because it is very complicated. When taxes on cigarettes go up, some constituents of mine will say that people will start smuggling them. This gives me an opportunity to highlight the difference in this two tier tax structure with a non-refundable tax.
People were smuggling cigarettes into Canada because of the price differential. Cigarettes used to go into the U.S. market without the tax. That created the incentive for people to smuggle them back into Canada, which created a very lucrative market for them. Under the present regime, we have a tax which in the main says that once cigarettes leave the manufacturers plant a non-refundable tax goes on them. If the economic incentive to bring cigarettes back into Canada is taken away, then we are going a long way.
The government understands that people are very creative. That is why we started off with a $4.00 per carton increase. Hopefully smuggling will not be an issue. However we will monitor that very carefully. Some people say the key factor is the price of cigarettes in the United States. However it is the differential and the incentive to smuggle Canadian cigarettes because Canadians like to smoke Canadian cigarettes. That is why we have to eliminate the economic incentive.
I would like to congratulate the member on his intervention. Would he comment further on those aspects.