Debates of May 14th, 2001

Tobacco Tax Amendments Act, 2001

[Some hon. members]

Agreed.

[Philip Mayfield, Canadian Alliance, Cariboo—Chilcotin, BC]

Mr. Speaker, we are here today to debate Bill C-26. The bill has some good qualities and our party agrees with some aspects of the bill.

However, I would like to suggest that the government look to the Senate to study a bill that addresses the real problems of tobacco use, particularly with children. Bill S-15 has gone before committee and may soon come before this House. Although Bill C-26 has some good qualities, I believe the bill from the other place really would be more appropriate. It targets youth and suggests a model for accountability of the delivery of government services. I believe, despite our support for Bill C-26, that Bill S-15 deserves more careful scrutiny.

Earlier in the day we debated Bill C-22 and Bill C-17. We talked about the complexity of the imposition of taxes and the tax act. Taxes in this instance are also extremely complex with some 40 pages of legislation and another 50 pages of explanations. My goodness, why does it always have to be so difficult for people to understand the government's intentions?

One of the main difficulties in increasing taxes, particularly for constituents who have service stations and corner stores, and those who are rural merchants, are that their businesses have been so caught up in the economic decline of the country, particularly where I come from, that the loss of this income in tobacco sales is a real difficulty.

Should the bill go forward, I would suggest that there be a commensurate reduction of tax on other economic activities that are sensitive to price changes. A reduction of taxes in other areas for people who are hit with these increases would be appropriate.

While it may seem equitable to some that the big, bad tobacco industry take this on, taxes are not necessarily borne by those who have the responsibility to pay those taxes.

I do not think I need to lecture adults about cigarettes and all the associated health risks but I do want to talk about why I am supporting the bill even though there is much about it with which I disagree.

We all know the facts. What needs to be addressed in the bill is the central reason for this bill coming into existence. We can argue over the wording of the bill. Some may call it a tobacco recovery levy and some may call it a tax. What we cannot argue about is the fact that the tobacco companies target children. These are the smokers of the future who the tobacco industry will depend on for their future income and profits.

Young people are the most important target for smoking prevention activities. Since most smokers in Canada begin to smoke in their adolescence, a major challenge for smoking prevention is to counteract the influences of the tobacco companies. Tobacco use among young Canadians must be reduced.

What does the data say? What are the numbers? There are close to 6.7 million smokers in Canada. Smoking among adolescents aged 15 to 19 has risen from 21% to 29% over the past 10 years, and females make up a large percentage of this group.

Smoking accounts for about 30% of cancers in Canada and 80% of those who suffer from lung cancer are smokers. Cigarette related deaths account for 40,000 deaths in Canada every year. These facts speak for themselves. We must do everything possible to stop children from getting involved with this killing habit. The bill is one step in the right direction.

Some may argue that tobacco farmers would suffer enormous economic hardship. However during the 1980s the number of tobacco farmers declined by about 50%. These farmers began to grow other crops and have benefited from assistance programs. There are others in the retail end of smoking who suffer as well. There must be compensation for those who suffer. There must be an ability for them to continue on but smoking is evil. It is wrong for us to poison our young people and have them sacrifice their lives. This has to be the bottom line.

In 1991 consumers spent over $10.1 billion on tobacco products. Of that amount about $6.6 billion went to the federal, provincial and territorial governments. There is no denying that this is a substantial amount of money but it amounts to less than 2% of federal and provincial revenues. Considering that tobacco taxes make up less than 2% of the federal revenue, there is even more incentive to reduce the number of children who want to smoke.

I want to compare the 2% of federal revenue to the health care costs in our public health care system. With over 40,000 deaths directly related to tobacco, the strain on our overburdened health care system is enormous. Those suffering from lung cancer as a result of years of tobacco use costs billions of dollars in health care costs. By reducing the number of children smoking, we not only save their lives but we can help save billions of dollars in health care at the same time.

These are very important reasons to help stop tobacco use among our children. When people stop smoking completely, the country saves money. In 1993 the societal costs attributed to smoking were estimated to be $11 billion, which is far higher than the income from tobacco.

The Canadian Cancer Society surveyed thousands of smokers and over 85% indicated that they wanted to quit and that they only smoked because they were addicted and could not get out of the habit. In 1994 almost 75% of Canadian smokers reported having tried to quit at least once.

What is needed from the government is leadership on the issue. The Minister of Health has taken some small steps to address the crisis of smoking among youth but small steps in the past have not been enough. The government needs to put the health of young children ahead of partisan politics and show some determination. We all must recognize the enormous health risks of tobacco and the true costs of allowing this habit to continue.

Children are one of the most vulnerable groups in our society and that is why aspects of the bill are so important. The bill would create an educational fund.

Bill C-26 would put a levy on tobacco and put the health of children ahead of everything else. By reducing tobacco caused illnesses and death through prevention, we are helping society as a whole.

Some argue that non-smokers should impose their views on smokers. Perhaps there is some merit in that. However I am arguing for the vulnerable children. Adults are responsible for the protection of children from this kind of harmful activity. The government is the watchdog and the guardian over that which would harm our children. The societal costs of smoking are tremendous.

We cannot forget that children need our protection from harm. They are vulnerable and impressionable. This is why elements of the bill are worth examining. Children are the future and the reason I am supporting the bill. Let us give them a fighting chance.

[Bob Mills, Canadian Alliance, Red Deer, AB]

Mr. Speaker, it is my pleasure to speak to Bill C-26, the tobacco tax amendments act, 2001.

Last year as a member of the health committee I listened to a lot of testimony from various tobacco producers and sellers. I also listened to many health experts and it became fairly obvious after several months of hearings just how damaging tobacco is to society and how it impacts on our health care system.

Whether it is the heart association or the cancer association, all of them bring solid evidence that tobacco kills. They tell us that 45,000 Canadians are killed directly by the use of tobacco every year. They also show figures representing billions of dollars taken from our health care system as a result of this habit.

Like the last member who spoke I find the most discouraging, disappointing and despicable part of the whole tobacco industry is the targeting of young people and the various ways that it operates around the world.

While in Germany recently I went past a number of schools. Adjacent to a school, sometimes on all four corners, there would be cigarette machines and advertisements targeting young people. We do not have that in Canada because we have progressed a long way from that. However that is the kind of industry we are dealing with, one that targets young people even in an advanced country like Germany.

Over the many years that I have travelled to developing countries I have seen little 10 packs of cigarettes being given to children outside schools. These children are only 8 and 9 years old. Many reports indicate that these cigarettes contain many times the nicotine level contained in normal cigarettes. In this fashion, tobacco companies hook them young.

The tobacco industry does not want the bill to pass. It is hard for me to agree with the tax increase, but in this case if the money is put toward stopping people from using this very dangerous product then this tax is reasonable and legitimate, and my party will support it.

It is hoped, however, that the dollars collected would not be like the dollars collected on the gasoline tax. That money is collected but is not put into roads. I hope this extra money would go to the health system and toward stopping our kids from smoking. In supporting the bill I have to say that this provision must be included. The dedication by the government must also be there.

Our country's health system is deteriorating. Many experts would say that we are 23rd out of the 29 OECD members, the most industrialized countries. That is not something to be proud of. Obviously one of the problems, and there are many others, is the lack of funding. Hopefully this funding would help that.

It is also hoped that the tax increase would allow some other tax decreases to occur. The thing that is probably hurting us the most and the reason that many of us came to the House was the debt of $550 billion of which $43 billion is paid out in interest every year. I imagine what we could do with the $43 billion to help our health system, to help kids stop smoking and many other things.

It has to be remembered that today we are spending $15 billion on health. We spend $12 billion on advanced education and $22 billion on various other social programs. If we had $43 billion we could probably stamp out the problem that the bill is addressing.

I believe that the bill is good for Canada as long as the money from it is used in the right way. It is hoped that it would go a long way to stopping young people from wanting to smoke.

[Judy Wasylycia-Leis, NDP, Winnipeg North Centre, MB]

Mr. Speaker, I cannot help but begin my portion of the debate on Bill C-26 by commenting on developments within the Canadian Alliance ranks.

I did not believe we would ever see the day when members of the Canadian Alliance would be supporting a tax hike. However, here they are today. I guess stranger things have been happening over the last little while. It is wonderful to see the transformation of Canadian Alliance members. I say good for them for recognizing that the tax system is an important part of shaping good public policy.

I hope they are able to use the logic they have applied to this debate in seeing tax increases as playing an important part in creating responsible social behaviour. It is something that needs to be extended and looked at in a whole number of areas, including conservation of our natural resources, the reduction of poverty in our midst and the pursuit of social justice. That is the bottom line in terms of the taxation system and what is important for Canadians.

I am also tempted at the start of the debate, following developments earlier in the House today, to say hello to my mom. It is a wonderful opportunity to pay tribute to mothers across the land and to make the connection between mother's day and the debate we are having today on tobacco control.

Many times in our history mothers have led the fight to create safer communities to protect the health of our young people. They have been involved in stopping drinking and driving. They ensure that pregnant women take all the necessary precautionary steps. They are also trying to prevent young people from getting addicted to the deadly product of tobacco. Women have been doing an incredible service for the country in the pursuit of health and well-being for all our citizens.

Today we have an opportunity to talk about tobacco control and to acknowledge the work of the federal Liberal government in pursuing one part of a comprehensive strategy to reduce the use of tobacco in society and to prevent addiction to cigarettes.

I acknowledge the importance of Bill C-26. It is a bill that would increase taxes on tobacco products. It would amend a number of acts which would result in an increase of $4 on a carton of cigarettes. That is an important development.

The members of the New Democratic Party certainly will support Bill C-26 at the final stage of approval by the House. However, I think it is incumbent upon us at this moment with this opportunity to look at what else the government could have done and to urge it to do more in this regard.

I was pleased to hear the Parliamentary Secretary to the Minister of Finance suggest that this is a beginning, that there are more tax increases on the way and that the government recognizes there is room to move when it comes to increasing the price of cigarettes and still not be worried or pressured because of the threat of smuggling.

I think it is fair to say that the government is actually making up for lost time. It has perhaps, I hope, seen the error of its ways in that devastating decision in 1994 when it caved in to the tobacco lobby, rolled back the tax increase on cigarettes and actually contributed to the very serious problem of smoking among our young people today.

It has to be acknowledged what that kind of taxation policy does and what that kind of caving in to tobacco companies can do in terms of our collective pursuit of preventing the use of tobacco and stopping addiction to cigarettes among our young people.

I hope the Liberals recognize what they have done and I hope today's measure in the form of Bill C-26 is an acknowledgement of their past wrongdoings and a determination to right a wrong and to move forward, doing everything we can.

In 1994 we had an opportunity to keep the taxes high on cigarettes, to keep products out of the hands of young kids and to stop a lot of folks from getting addicted. I think we really did a great disservice to this country. Because of the threat of smuggling, we dropped the tax increase and actually caused more young people to get addicted to cigarettes. It is fair to remind the House that under the Liberal government, addiction to cigarettes among young people has actually increased.

It is important to refer to the government's own document put out by Health Canada, entitled “Canadian Tobacco Use Monitoring Survey” for February to December, 1999, which points out that smoking by teens aged 15 to 19 years, though down significantly from 43% in 1981, has increased 21% since 1990 but appears to have reached a plateau at around 28% since 1994.

In the Liberal era, smoking among young people and addiction to cigarettes has actually increased significantly. That has to be the direct result of caving in to the tobacco industry in 1994 around the tax increases and a result of a failure of the government to actually implement a fully comprehensive smoking cessation program.

The question for us today is this: is a $4 increase on the price of cigarettes enough? Could we do more? The answer is clear. Many groups have said there is all kinds of room to move. We know from some of the mapping done by those involved in this field that there is still a considerable gap between the price of cigarettes in Canadian provinces and the price of cigarettes in U.S. border states. The statistics suggest that we could raise cigarettes prices quite a bit more in order to be even closer to the price of cigarettes in the United States, so there is no need to be leery about the whole issue of smuggling in that context.

The comments of groups that have pointed out that we have overreacted to the threat of smuggling are legitimate. It is very important to remind ourselves that perhaps the government got caught up in something that did not necessarily have a basis in fact.

I point specifically to much work done by the Canadian Cancer Society and the Non-Smokers' Rights Association, which over and over have reminded the government that it has room to move in terms of increasing the price of cigarettes. In fact, they suggest that even if the Canadian government raised tobacco taxes by $10 per carton the price gap between Ontario-Quebec tobacco and the now much more expensive American cigarettes would only close by about 50%. They said that in a letter and documentation put together by those two organizations in March of this year.

The executive directors of those two organizations, Ken Kyle for the Canadian Cancer Society and Garfield Mahood for the Non-Smokers' Rights Association, stated:

—we believe the fear of smuggling in some quarters has been greatly exaggerated. If the United States can maintain high tobacco taxes without significant smuggling, so can Canada.

I put that on the record because I take in all seriousness the parliamentary secretary's comments about potential future increases and indicate to him that there certainly would be no opposition from us. I believe that he would have the support of many Canadians if his government chose to do that on an expeditious basis.

There is another question around this announcement and this bill. Is there enough money for and is Canada doing its part in tobacco prevention and cessation? The announcement that was tied to the tax hikes under Bill C-26 indicated that there would be an additional $480 million over five years for the tobacco control program in Canada. That is clearly still far below the levels that most groups active in this field have called for. It is certainly not much of an increase when we break it down in terms of what the government is spending today.

The government's own press release indicates that about $210 million over five years would be assigned directly for prevention of tobacco addiction and for tobacco control programs. That is about $42 million a year. That is hardly in line with what Canada is obligated to spend if we are to deal with the serious problem in our society today. I do not need to repeat the figures.

We heard from the Alliance and other members today about the 6 million smokers in Canada today, the 45,000 deaths per year, the fact that 250,000 young people annually become addicted to cigarettes, the fact that 90% of all smokers are addicted before the age of 18 and the fact that we spend $3.5 billion annually in terms of the health costs associated with smoking. All of those facts should be obvious to the government and should point this government clearly in the direction of an increased expenditure for smoking prevention and cessation programs.

That is precisely the essence and the purpose of Senator Kenny's bill, which has been through this House a couple of times and is on its way for the third time. Bill S-15 is due to arrive in the House very shortly. It follows on the heels of Bill S-20 which died on the order paper when the election was called. That followed Bill S-13 which was killed here in this place as a result of the government rising on a point of order and suggesting that it was out of the bounds of this place to pursue a money bill, a tax bill, that came from the Senate.

There is a question for all of us today. Given everything we have learned, given the work by groups on this bill, given the clear changes to Bill S-15 to make it compatible with the rules of this place, what will this government do in the next couple of days when the bill makes its way from the Senate to the House of Commons?

I hope that under no circumstances would the government try to put the kibosh that bill and suggest that it is not within the purview of this place to proceed with a bill that would actually raise the price of cigarettes on a much more significant basis than the government has been prepared to do to date and would ensure that the money is targeted specifically for smoking prevention and cessation programs. We are looking under that bill at a fund of approximately $360 million a year to be dedicated to smoking cessation and prevention among young people and others in our society.

If we compare that $360 million a year to the $210 billion that the government promises to dispense over five years, we can see the huge gap in the proposals and the clear need for Senator Kenny's bill. I would hope that when the bill enters this place we would all be united in support of the bill to ensure it is allowed for debate so that we can have a meaningful discussion about the values of a tobacco control initiative that increases the cost of tobacco by another $10 per carton and ensures that the money goes into a special fund to be administered by non-profit organizations.

That would bring us much more in line with other countries that are taking the issue seriously. It is important, for the record and for the government today, to be mindful of the fact that under the government and the way we administer our programs dealing with tobacco prevention, we spend about 66 cents per capita on this important endeavour. Many others have pointed out how that compares to other jurisdictions. For example, $32 per capita is spent by the state of Ohio and $16 per capita by Massachusetts and so on. All academic overviews of the issue and all analyses by experts on this serious problem in our society show that Canada should be spending more like $270 million to $720 million a year on dealing with a problem that is growing as we speak.

The facts that more young people are turning to cigarettes, that smoking at an early age leads to a lifelong addiction and that it very likely leads to ill health and even death should be enough to tell us to get on with the job and do something now. The old expression that a penny of prevention is worth a pound of cure suggests that if we invest a little bit now we will save a heck of a lot later on if we are serious about this problem.

Finally, as part of a comprehensive strategy dealing with the high rate of tobacco and cigarette smoking in society today, we must have an increase in the cost of cigarettes, as the government is doing in part today. We must have a clear focus on education and prevention, a model of which is provided by Senator Kenny's bill coming from the Senate this week.

We also must do more in terms of advertising and restricting tobacco companies' attempts to get through to our young people. It was just over a month ago that we raised in the House a totally destructive ad by du Maurier which ran in dailies across the country. It was a huge colour advertisement that basically suggested there was a free trip to the city of New York to be won if one was a smoker and over the age of 18. The ad said “Live it up in the city that never sleeps. Win one of two amazing New York experiences”. It went on to set out the terms and conditions for applying for that prize.

The government has done nothing. We have appealed to the government to look at the Tobacco Act and to realize that this is contrary to the law. We have called upon the Minister of Health to take action. I wrote to the Minister of Health on March 23 and asked him to please take action against du Maurier and do something about that deplorable ad. I have yet to hear from him. I am hoping that this is still under advisement and that the Minister of Health and the government are prepared to apply the full force of the law in regard to this ad by du Maurier, because it is contrary to the law. We have heard clearly from many groups about how it violates the law.

I am referring to the Coalition québécoise pour le contrôle du tabac, which said, on March 27, “The tobacco industry is thumbing its nose at the government and its Tobacco Act”.

This was the reaction of the Coalition québécoise pour le contrôle du tabac to the new du Maurier ads announcing a contest to win a five-day trip to New York.

That organization gave the Minister of Health some very specific articles in the tobacco act to pursue in terms of contravention. Specifically that organization and others have referred to articles 21 and 29 of the tobacco act. We hope the government will take action. If it is serious, as it indicated today, about controlling access to cigarettes by raising the price then surely it is prepared to take on tobacco companies when they break the law. Surely the government is prepared to show leadership by example.

Leadership by example would do more than anything to deal with this tragic epidemic in society. I am thinking specifically of the government's decision to include tobacco industry representatives on the trade mission to China in February.

It struck us and many Canadians as odd that the government would show such hypocrisy. On the one hand it pretends to be interested in controlling tobacco use and on the other hand it promotes tobacco in a country where there is already an epidemic of smokers. Some 800,000 Chinese people die every year because of tobacco addictions.

The government is involved in global efforts to control tobacco and we commend it for that. Given the fast flow of goods and services around the world, dealing with cigarette addiction and coming up with meaningful tobacco control programs must be done internationally. That is precisely where we would like to see the government show leadership.

We commend the government for being involved in what is clearly an important initiative, one that requires more time and effort by all of us. However it is hard to take seriously the government's efforts regarding international tobacco control when it is neither showing such leadership domestically nor leading by example in terms of ensuring we practise what we preach wherever we go.

We support Bill C-26. Increasing the price of cigarettes is an important and necessary step. However it falls far short of a comprehensive strategy that involves education, prevention, advertising restrictions and ever increasing prices on tobacco so that it is priced out of reach of our young people.

I thank the House for its attention and urge the government to follow these suggestions.

[André Bachand, Progressive Conservative, Richmond—Arthabaska, QC]

Mr. Speaker, I have a couple of technical points to make before I start. I advise the Chair that I will be splitting my time with my colleague from Kings—Hants who has not had a cigarette since the holiday season. He is setting a example for the House.

I would also like to thank the translation service and the interpreters. I find it very hard to stick to my prepared speech. I want to thank them for their understanding and for trying to follow me. I will try to speak more slowly. They do an absolutely remarkable job and I take this opportunity to congratulate and thank them for their understanding.

This being said, Bill C-26 is a tax bill, which hopefully will change things in the area of health. While I was looking at the bill I was thinking “Can a tax bill really save lives?” We certainly hope so, and this is the reason why we have been asking the government for a long time to put money back into health. The government should put more money into health.

If we are willing to levy an additional tax to put warnings on cigarette packages alerting young people to the dangers of tobacco, if it works, and we hope it will, we should take this opportunity to invest massively in transfer payments to the provinces so that they can deal with others issues.

Bill C-26 sets this amount at $4 per carton of cigarettes. I am a smoker, the only one in the Progressive Conservative caucus, and I am wondering why $4, why not $3, why not $10? Honestly, I do not know why. The government is proceeding cautiously, step by step. It claims smuggling is not an issue, yet it is still moving very timidly, according to anti-tobacco groups both in Quebec and the rest of Canada.

The parliamentary secretary said that $4 will give us this much money. It would have been interesting to know what the impact of a tax increase is on cigarettes sales. If people buy less, revenues will be lower. What are the mathematics? What is the government's objective in introducing Bill C-26 as it relates to the reduction of tobacco use, particularly among young people? We do not know.

Of course, it is not ethically correct to say that $4 are added to the price of a carton of cigarettes. However, we do not know what the government's plan in the fight against tobacco is. We know that a bill is coming from the other place.

People are applauding Bill S-15, except that there is a problem with parliamentary tradition. The problem is the fact that a tax is asked for by the other place. The House will examine that bill. I am not worried about that. If Bill S-15 is not acceptable to this House, in accordance with parliamentary tradition, the government, if it is serious, will introduce a bill the very next day, using the same arguments and the same information and will identify it with a C instead of an S. If the government is serious about its fight against tobacco, it must arrange to apply the principle behind the details in the bill.

This being said, $4 is one thing, but interestingly, the government is controlling something controllable in the fight against tobacco. We remember that, when there was a major increase in taxes, companies would sell their cigarettes to the United States and the cigarettes came back through somewhat illegal channels. We would buy Canadian tobacco, but it had made a short trip to the United States before coming back here. This bill corrects this situation.

We knew that one of the reasons why there was a black market was the fact that there was no tax on cigarettes coming out of the production plant. It took years to deal with that issue. We were aware of the problem and of the legislation, but it took six or seven years to make it into an efficient tool.

Now we are told that there is no problem anymore. We know that the black market is active again, albeit to a lesser degree than before, because it is harder now. However as we all know, if there is money to be made, criminals are usually quick to get involved.

As for the Canada—United States agreements, we do not know what measure was taken so that both sides would talk to each other. The case of duty free shops is interesting. People used to go to Old Orchard or elsewhere in the United States for a day or two, perhaps a week, and come back with cigarettes that cost a lot less. That situation is being corrected. This only makes sense.

Indeed, if tobacco products are taxed in Canada because they are deemed to be dangerous products, there is no reason to sell them for less to Canadians who buy them in duty free shops. We must be consistent. The Minister of Finance and his American counterpart deserve praise for having taken the necessary steps to deal with this issue.

We support Bill C-26, but the fact is that according to statistics, over 40,000 people die every year because of tobacco. If two people die from another cause, the government takes immediate action to ban that cause. However tobacco kills 40,000 people per year, and all it does is increase taxes and tell Canadians that it is a dangerous product. I find this a bit cynical.

I come from a town called Asbestos. What is being said around the world? “Asbestos kills. We are banning it”. If we apply the anti-tobacco logic, why not ban tobacco? Why not say that it is a dangerous product and that we are simply banning it. Why not? Because there is a certain degree of social acceptance.

We hope that the anti-tobacco program will be aimed not just at young people, but at all Canadians. Smoking must become unacceptable. I am a smoker and I must say that the bylaw recently passed by the new city of Ottawa, which will take effect August 1, promises to make life difficult.

They are talking about increasing the buffer zones, even outside. There will be buffer zones, as there are in hospitals, for instance. When one goes to the hospital, one may not smoke. There are even restricted areas at entrances. We do not have this situation in the parliamentary buildings; we have our famous smoking urns outside.

I recall being outside smoking a few years ago when the temperature was minus 35 Celsius. Neither cold, nor snow, nor sleet, nor rain will stop a smoker. We are like letter carriers, so we go outside to smoke, and the current Deputy Prime Minister went by and said: “My God”. It smelled terrible. Eventually the buffer zones will be enlarged.

That having been said, it is true that there are people who die because of tobacco. An additional $4 per carton will not solve everything. Bill S-15 will not solve everything. What is missing in this battle is a united front. The battle does not involve the federal, provincial and municipal levels. They do not talk to one another. This is nothing new on the part of the federal government, which acts on its own most of the time, but it ought to talk to its partners.

What other municipality would act like Ottawa? Does it have the support of the provincial and federal governments? We do not know. Within the information program, will the federal government spend money to encourage the provinces and municipalities to pass bylaws, as it has with the City of Ottawa? If there is a constitutional problem relating to a total ban on smoking, will the federal government be prepared to listen to the arguments?

There are logical measures being put forward and we applaud them, but taxation measures are not what is going to solve health problems.

I will close with the remark that, if it is a good thing to address youth smoking by adding more tax and to use those funds for awareness and education campaigns, it is surely also a good thing to reinvest in the entire health system the necessary funds to provide choices to people, not just Quebecers but all Canadians, so that they can live healthier lives.

We applaud Bill C-26 and await Bill S-15, these financial legislative measure introduced in this parliament, which make sense for the health of those we represent. The Conservative Party will be supporting them. Thank you, Mr. Speaker, and may I wish you good health.

[Roy Cullen, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, the hon. member asked what the government's objective was behind the increase in the tax on cigarettes and how it would reduce the incidence of smoking. That is a very good question.

Unfortunately the last time we raised the tax we saw a lot of smuggling. Many Canadians got cigarettes through the back door so it was hard to correlate the increase in tax with the decreased incidence of smoking. However the government is quite confident that the new measures, along with the reduction of economic incentives to smuggle cigarettes across the border, should reduce or eliminate the incidence of contraband. Therefore, we will have a much better measure moving forward. However there is some good generic data that supports the notion that increasing the taxes reduces the consumption, other things being equal. If people can get the cigarettes through the back door that will not happen. I just wanted to make that comment. I thank the member for his contribution.

[André Bachand, Progressive Conservative, Richmond—Arthabaska, QC]

Mr. Speaker, that is it exactly. I thank the parliamentary secretary for his remarks. Indeed, in Canada, when there has been a marked, rapid and brutal increase in the taxes on tobacco products, the black market has moved in.

That said, the data are available and studies, which are, more or less conclusive, have been done. In the U.S., for example, increased taxes on cigarettes had limited effect on the number of smokers per age group. When one state is located in the central part of the States, and its partners from the other states have similar measures, data are available.

In Bill C-26, the most interesting measures, as I was saying earlier, concern a tax on tobacco products at the factory gate. This is about what we have. The old federal taxes we had prior to the arrival of the infamous, questionable and questioned GST, like the old federal manufacturing tax, resolved part of the problem.

It will be interesting to see the effectiveness and the impact of a tax on health. There is a study that has nothing to do with health. At one point a curve was developed, which was used frequently by Mr. Reagan in the States: the higher the taxes, the higher the revenues. At a certain point, however, revenues drop.

It will be interesting to see what tax on cigarettes will be the optimum in discouraging smoking among the young. I hope that the Department of Health will monitor this closely.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, it is with pleasure that I rise today to speak on Bill C-26. I thank my colleague, the member for Richmond—Arthabaska, for his comments and personal reflections on this issue.

It is important to realize that smoking is on the rise in Canada, particularly among young people. That is the most troubling part of this whole trend relative to smoking. In 1990 in the age group between 15 and 19, 21% of that age group was smoking. That rose to 28% by 1999.

Let us look at our strategy to combat smoking. We have seen the banning of sponsorship of auto races and cultural events across the country. It is questionable whether or not that ban has helped reduce smoking. What it has done is reduce funding for cultural events across Canada. I question the government's strategy on whether or not banning sponsorships of cultural activities has made a big difference in reducing smoking. That has been part of the government's strategy.

Another one strategy has been these garish, egregious packages which have pictures of gangrenous feet and cancerous lungs. Now we have teenagers trading them like playing cards, with one teenager saying to another “I'll give you a gangrenous foot for a cancerous lung”. That sort of thing is going on, so I sometimes question whether or not that initiative is achieving its mark.

One jurisdiction that has made a difference in reducing the incidences of smoking with young people is California. We should take a serious look at how their best practices achieved that reduction in smoking. Certainly its advertising and promotion was very sophisticated. There was not a banning of sponsorship of events by the cigarette companies. Those have continued. The warnings on the cigarette packages are discreet but we have seen in recent years a 43% decline in smoking in California. The big difference is the funding of educational programs.

In Canada the government's latest initiative will result in what I think works out to about $2.33 per Canadian per year. In California the amount of funding devoted to smoking cessation or anti-smoking initiatives, from a marketing and educational perspective, is closer to $5 per person.

California focused on community groups, schools, the education system and on trying to avoid the behaviour from being developed in the first place. We really should take a hard look at California and other jurisdictions that have been successful in this light.

The government has the best of intentions with a lot of these initiatives. That is not to be questioned. What is more important than just having the best of intentions is having great results. We should take a serious look at a more significant investment on the education side and working with the provinces to ensure that we are doing everything we can to prevent young people from smoking.

As I said, I personally question the banning of the sponsorship of sports and cultural activities. I do not think that has had an impact. I stand to be corrected. I also question the garish packages with the pictures on them. I think that has perversely in its own way, through some type of reverse psychology, created an attraction to young people who, for some reason that is beyond me, are drawn to these sickening packages.

Whether or not the price will affect people's decisions, I can only speak in an anecdotal way from constituents who have told me that increases in cigarettes prices make a difference. They make a difference in their lives in terms of the affordability. It is intuitive to expect that raising prices will have an impact on reducing the actual incidence of smoking.

I do not smoke any more. When did I never bought them, I used to bum them off my colleague from Richmond—Arthabaska, so the price was never a factor for me. However smoking caused a few friendships. It was my efforts that slowly reduced the incidence of smoking in our caucus because none of the other members could afford to smoke and give me free ones. There are reasons why I am finance critic. Parsimony may be one of them.

I am very pleased that I have quit smoking. I feel very good about that. I am looking forward to the day when our caucus is completely smoke free. We are nearing that day very quickly. By that I mean I want the member for Richmond—Arthabaska to quit smoking, not that I want him to leave caucus. I see the hon. member for Compton—Stanstead opposite and I just wanted to make sure that I was being absolutely perfectly clear on this.

In any case, I commend the government's efforts in this regard. It is something of which we have to do more. I question some of the directions and initiatives, but I certainly do not question or dispute the positive intentions of the government. I just hope we are doing everything we can to fight this scourge on the health of Canadian citizens and to foster a healthier Canada, as we have now entered the 21st century. We have to work together to ensure that happens. As policy-makers and as leaders, we have to ensure that we do everything we can to ensure that. With health costs rising, the one way we can make a difference is to reduce the incidence of smoking, particularly with young people.

[Roy Cullen, Liberal, Parliamentary Secretary to Minister of Finance]

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.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, I hope this initiative is more successful because of the two tier nature of it in preventing the cross border activities.

His government has done something else which will help reduce the incidence of Canadians buying cigarettes from the U.S., and that is its very dedicated effort to reduce the value of the Canadian dollar. The government has successfully reduced the Canadian dollar by almost 12 cents during its period in office in the last eight years. That in and of itself makes a difference in convincing Canadians not to buy cigarettes in the U.S. because they cannot afford to pay in U.S. dollars.

Perhaps in some perverse way that is part of the long term strategy of the government to not only lock Canadians in the fiscal prison, that is the low dollar, but also to prevent them from being exposed to nasty substances like American cigarettes, which are pretty bad by the way.

I wish he could comment on that because I was wondering why the government was paying so little attention to the precipitous decline in the dollar. However I realized that the government was actually trying to protect the health of Canadians by reducing the dollar to such a point to reduce in any way, shape or form incentives for Canadians to buy cigarettes in the U.S.

[Howard Hilstrom, Canadian Alliance, Selkirk—Interlake, MB]

Mr. Speaker, in regard to the smuggling aspect of tobacco, the House should hear the seriousness of that situation.

The last case I worked on when I was in the Royal Canadian Mounted Police involved an agent who was paid to get inside the organization that was smuggling tobacco. That agent ended up murdered on the side of the road after charges were laid against the crooks who were bringing the tobacco across the border.

If anybody in the House or anybody watching thinks that tobacco smuggling is not a serious issue with serious consequences for this country then I have news for them. It is organized crime. Has the member considered the fact that smuggling is a much bigger issue than just the fact that someone is making a few dollars from it?

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, I thank the hon. member for his question. He has identified a very important issue. What are we doing about funding, particularly for the RCMP in terms of dealing with organized crime?

Anything we do that creates greater incentives for smuggling and organized crime needs to be done in lockstep with better funding and resources for the RCMP. It is of little use to pass laws we cannot enforce. It is of little use to raise taxes if it results in smuggling which we cannot police effectively. I think the member's point was that we need to be vigilant in ensuring the RCMP has the resources to do what is necessary. It is a very serious issue.

I hope, as the Parliamentary Secretary to the Minister of Finance said, that this initiative—

[The Acting Speaker (Mr. Bélair)]

It being 6.30 p.m. and pursuant to the order adopted earlier today, Bill C-26 is deemed to be read a third time and passed.

(Motion agreed to, bill read the third time and passed)

The House resumed from May 10 consideration of the motion that Bill S-17, an act to amend the Patent Act, be read the second time and referred to a committee.

Patent Act

[The Acting Speaker (Mr. Bélair)]

The House will now proceed to the taking of the deferred recorded division on the motion at second reading stage of Bill S-17.

Call in the members.

And the bells having rung:

Business Of The House

[John Reynolds, Canadian Alliance, West Vancouver—Sunshine Coast, BC]

Mr. Speaker, I was just in discussions with the government House leader and my party has decided to withdraw its amendments to Bill C-22 and Bill C-17. I think if you were to seek consent you would find agreement for that.

We will be voting on the main motion to both those bills.

[The Speaker]

Is there unanimous consent to permit the withdrawal of the two amendments on each bill announced by the hon. chief opposition whip and to proceed with votes on third reading motions on both bills tonight?

[Some hon. members]

Agreed.

(Amendments withdrawn)

The House resumed consideration of the motion that Bill S-17, an act to amend the Patent Act, be read the second time and referred to a committee.

Patent Act

[The Speaker]

The question is on the motion for second reading of Bill S-17.

(The House divided on the motion, which was agreed to on the following division:)

Division No. 95

[The Speaker]

I declare the motion carried. Accordingly, the bill stands referred to the Standing Committee on Industry, Science and Technology.

(Bill read the second time and referred to a committee)

The House resumed consideration of the motion that Bill C-22, an act to amend the Income Tax Act, the Income Tax Application Rules, certain Acts related to the Income Tax Act, the Canada Pension Plan, the Customs Act, the Excise Tax Act, the Modernization of Benefits and Obligations Act and another Act related to the Excise Tax Act, be read a third time and passed.

Income Tax Amendments Act, 2000

[The Speaker]

The House will now proceed to the taking of the deferred recorded division of the motion at third reading stage of Bill C-22.

[Marlene Catterall, Liberal, Ottawa West—Nepean, ON]

Mr. Speaker, I think you would find consent that those members who voted on the previous motion be recorded as voting on the motion now before the House, with Liberal members voting yes.

[The Speaker]

Is there unanimous consent to proceed in this fashion?