Debates of March 22nd, 2002
House of Commons Hansard #162 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was excise.
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Excise Act, 2001
March 22nd, 2002 / 12:35 p.m.
Excise Act, 2001
Bryon Wilfert Parliamentary Secretary to the Minister of Finance
Mr. Speaker, I appreciate the opportunity to present Bill C-47, an act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores, for second reading today.
Bill C-47 introduces a modern, legislative and administrative framework for the taxation of spirits, wine and tobacco products under a new Excise Act. This new framework does not address substantive tax rate or base matters for alcohol and tobacco products. Bill C-47 also implements other excise measures, specifically the changes to ships' stores provisions that were announced on September 27, 2001, and the tobacco tax increases announced on November 1, 2001.
Before elaborating on the details of the new Excise Act, I want to take a moment and provide hon. members with some background that will help put these new measures in context. The Excise Act is the foundation of the federal commodity taxation system for alcohol and tobacco products. It imposes excise duties on spirits, beer and tobacco products manufactured in Canada. It includes extensive control provisions relating to the production and the distribution of these products. Duties equivalent to the excise duties on domestically produced goods are levied on imported spirits, beer and tobacco products under the customs tariff. As well, excise taxes are imposed on domestic and imported wine and tobacco products under the Excise Tax Act.
Historically, commodity taxes on specific goods have been an important element of Canada's federal tax system. In the first half of the 1900s they accounted for as much as 25% of federal revenues. While their relative importance has declined in recent years, these levies are still significant. In 2000-01, duties on alcohol and tobacco products raised about $3.4 billion in federal revenues.
Why, then, is this bill needed? Quite simply because the current Excise Act is archaic. It is one of the oldest taxing statutes in Canada, existing in previous configurations before Confederation with parts of the present act flowing from the consolidated inland revenue act enacted in the 1800s. While periodically amendments have dealt with specific issues, the Excise Act has never before been the subject of an indepth review and revision.
Let me provide a few illustrations of the archaic provisions in the existing Excise Act. The existing act allows excise officers to enter premises at any time and break up or remove parts of the premises such as the walls, ceilings and doors. Taxpayers who suffer losses as a result of the actions of excise officers are only entitled to damages of 20¢. Any person found guilty of possessing or selling alcohol in contravention of the Excise Act could face up to 12 months of hard labour.
Licensed producers are prohibited from operating at night without prior authorization from the Canada Customs and Revenue Agency, CCRA, and must comply with the requirement to have an excise officer present at the licensee's expense. Licensees who intend to make any alterations to their premises are required to provide the CCRA with a detailed description of the proposed alterations and, following the completion of the work, with plans of the work. Pipes that are used in a distillery to convey spirits are required to be coloured blue and those used for beer are to be coloured green. Licensed producers are prohibited from erasing any words or figures from their books and records. The only way changes to a licensee's books may be made is by crossing out words or figures with ink in such a way as to ensure that they remain legible.
These are but a few examples of how outdated the current Excise Act is.
In recent years, both industry and government became increasingly aware of the need for a substantive review and modernization of the excise framework. In particular, industry has undertaken significant development with respect to new technology, product marketing and distribution initiatives which the existing Excise Act does not accommodate adequately.
Other factors also pointed to the need for review of the framework. For example, there is now greater foreign competition in the Canadian markets for beverage and non-beverage alcohol. However, the pervasive controls mandated by the Excise Act impose high compliance costs on industry and impair the competitiveness of Canadian producers. The Excise Act also has become increasingly difficult to administer and impedes CCRA's ability to fully adopt modern administrative practices. In addition, there was a need to address recent wine contraband pressures that have arisen in part because wine, which currently is taxed under the Excise Tax Act, has no substantive controls placed over its production and possession.
Finally, there are complexities and inefficiencies to both government and industry because tobacco manufactured in Canada currently is taxed under both the Excise Act and the Excise Tax Act. As a result, the government recognized that a revised excise framework was in everyone's best interests. A modern framework would generate stable and secure revenues and also address contraband pressures. Moreover, this could be achieved without imposing unrealistic or unnecessary costs and administrative burdens on industry participants.
Prompted by the need to update the Excise Act, the Department of Finance and the Canada Customs and Revenue Agency jointly released a discussion paper on the Excise Act review in 1997. This paper outlined a proposal for a revised legislative and administrative federal framework for the taxation of alcohol and tobacco products.
The review was guided by the following three objectives: first, to promote a modern legislative framework for a simpler and more certain administrative system that recognizes current industry practices; second, to facilitate greater efficiency and fairness for all parties, leading to an improved administration and reduced compliance cost; and third, to ensure the continued protection of federal excise revenues.
Building on this discussion paper proposal, the government followed up in 1999 with the release of draft legislation and regulations. Public consultations, an important element in any federal policy initiative of this kind, formed an integral part of the review. With the discussion paper and the draft legislation regulations as a basis, extensive consultations were conducted with affected industry groups and businesses, provincial governments, liquor boards, various federal departments, the Royal Canadian Mounted Police and other enforcement agencies. Refinements were made to the original review proposals with the result that Bill C-47 has been given broad support among the spirits, wine and tobacco sectors, the provincial liquor boards and the law enforcement agencies.
Before discussing the new legislative framework, I should mention that the bill does not address beer, which, with the concurrence of the brewing industry, will remain under the existing Excise Act for the time being.
While time unfortunately precludes me from reviewing all the measures in Bill C-47, I would like to provide the House with a brief overview of some of the key components. Bill C-47 introduces core elements of the framework outlined in the discussion paper issued by the government in 1997, including: maintaining the imposition of duty at the time of production for spirits; the replacement of an excise levy at the time of sale for wine with a production levy at an equivalent rate; the deferral of the payment of duties for spirits and wine to the wholesale level; and the introduction of modern collection tools. At the same time, Bill C-47 helps to address the government's ongoing concern about the smuggling of alcohol.
Let me be more specific. A key element of the framework is the maintenance of the production levy, which as I mentioned, is extended to wine in the bill. The production levy incorporates strict controls on the production, importation, possession and use of non duty paid alcohol and significant penalties for breaking the law.
At the same time the bill removes the current outdated and onerous controls on premises and equipment which have hindered the spirits industry operating under the Excise Act. This means that businesses will now have greater flexibility to organize their commercial affairs to respond more quickly to market changes. Anyone producing or packaging spirits or wine will be required to have a spirits or wine licence.
Although vintners must be licensed under the new framework, the current small manufacturers tax exemption will be maintained for wine produced by very small vintners, especially vintners with sales of wine not exceeding $50,000 in the previous 12 months. As well, individuals who produce wine for their personal use will continue to be exempt from having to be licensed and pay duty.
Bill C-47 also proposes a new warehousing regime for deferring duty on packaged alcohol that will place domestic and imported packaged alcohol on an equal footing. As well it will accommodate the privatization initiatives of some provinces for the warehousing of liquor.
As under the existing Excise Act, comprehensive controls will exist on non-beverage uses of spirits and wine to protect federal excise revenues derived from beverage alcohol. These controls include the licensing or registration of users, the approval of product formulations for which spirits and wine may be used without the payment of duty, and the specification of denaturing standards.
The bill also eliminates the current nominal rates of duty that apply to certain non-beverage uses of spirits, such as spirits used in the manufacture of pharmaceutical goods. These nominal duties are inconsistent and erroneous in application and disadvantage domestic products manufactured with spirits vis-à-vis similar foreign products entering Canada.
While the fundamental controls over non-beverage alcohol remain unchanged from the existing excise framework, Bill C-47 contains new measures on imported industrial alcohol to ensure the integrity of the domestic alcohol market and the production of federal revenues. In particular there will be a requirement for imported denatured industrial alcohol to be sampled and tested to ensure it meets Canadian denaturing standards.
The comprehensive controls on the possession, distribution and use of non duty paid spirits and wine will also significantly improve the offence structure and enforcement function in regard to alcohol.
Finally, fines for alcohol related offences will be substantially increased. Proceeds of crime provisions will now cover serious alcohol offences.
Turning now to some of the tobacco provisions in the bill, the new legislative framework in Bill C-47 merges the current excise duty and excise tax on tobacco products, other than cigars, in a single production levy. This will result in improved administration and reduced compliance costs for the industry.
The new legislative framework incorporates the revised tobacco tax structure introduced in April 2001 and previously enacted, which formed part of the government's comprehensive strategy to reduce tobacco consumption.
My hon. colleagues will recall that the tobacco tax structure now includes: an excise tax on imported manufactured tobacco sold in duty free shops; a customs duty on manufactured tobacco imported by returning residents under the terms of the travellers allowance; and a revised excise tax and duty structure for exported domestic manufactured tobacco.
While the measures in Bill C-47 will provide a more streamlined framework for the taxation of tobacco, I want to assure the House that the fundamental controls over tobacco under the existing excise framework will be maintained. In particular, the current stamping and marketing requirements for tobacco products will continue to apply and will play a key role in the enforcement of tobacco provisions in the bill.
In addition, the legislation incorporates the current offence provisions relating to the illegal production, possession or sale of contraband tobacco which have proven to be effective.
The new excise framework also contains a number of administrative measures that will enable the Canada Customs and Revenue Agency to improve its level of service to clients and its overall administration of the excise framework for alcohol and tobacco products.
These measures, which are consistent with CCRA's integrated accounting initiative, include: a duty remittance and return structure harmonized with commercial accounting periods and the goods and services tax and harmonized sales tax, GST/HST, legislation; new assessment and appeal provisions similar to those under the GST/HST legislation; and a range of modern collection mechanisms, such as certificates of default, garnishment, seizure and the sale of goods and director liability.
In addition, the bill provides for a range of administrative penalties that will be imposed on licensees, registrants and others dealing with excisable goods who fail to comply with particular requirements under the law.
The new legislative framework will ensure that the excise duties on alcohol and tobacco are collected in a more effective and efficient manner. As well, it provides an array of modern administrative and enforcement tools for ensuring compliance with the proposed statute.
In summary, the new legislative and administrative framework for taxation of spirits, wine and tobacco products will provide: a simple and more certain taxation structure; equal treatment for all parties; improved administration and lower compliance costs; greater flexibility for businesses to organize their commercial affairs; and enhanced protection of excise revenues.
In the few remaining minutes, I will briefly discuss three additional measures in Bill C-47.
The first concerns changes to the ships' stores provisions under the customs and excise legislation. As my hon. colleagues know, ships' stores provisions grant relief from duties and taxes for goods used on board ships and aircraft in international service.
These changes, which were announced on September 27, 2001, respond to a recent Federal Court of Appeal decision that ships' stores regulations went beyond the scope of their enabling legislation. Bill C-47 provides the proper legislative authority for these regulations. The changes will take effect on the date the provisions identified by the court were incorporated into the regulations.
A second measure implements a temporary fuel tax rebate program for certain ships that will no longer qualify for ships' stores relief as a result of the proposed amendments to ships' stores regulations effective June 1, 2002.
Ships that would be entitled to this rebate are commercial tugs, ferries and passenger ships travelling on the Great Lakes and the lower St. Lawrence River that are not engaged in international trade. This rebate will apply on fuel purchased between June 1, 2002 and December 31, 2004. It is intended to provide affected operators with adequate time to make the transition to the new ships' stores rules.
The third measure implements the federal tax increases on tobacco products that were announced on November 1, 2001. Like the April 2001 measures I referred to earlier, this tobacco tax increase is part of the government's comprehensive strategy to improve the health of Canadians by discouraging tobacco consumption.
These increases re-establish a uniform federal tax rate for cigarettes across the country and amount to $2 per carton of cigarettes for sale in Quebec, $1.60 in Ontario and $1.50 in the rest of Canada. The increases are co-ordinated with provincial tobacco tax increases.
The government has always said that it would continue to work toward restoring tobacco taxes to pre-1994 levels as quickly as possible. The measures in Bill C-47 are one more step in the process of restoring tobacco tax rates in ways that will minimize the risk of renewed contraband activity.
In closing, let me say that the three elements of the bill all deserve to be passed without delay. It makes sense to implement a new Excise Act for addressing a longstanding need of both industry and government to rationalize the ships' stores provisions and to approve the tobacco tax increases for reducing tobacco consumption.
I urge all hon. members to support the passage of the legislation without delay.
Excise Act, 2001
Ken Epp Elk Island, AB
Mr. Speaker, I think you look very good in the chair. Perhaps you aspire to making that a permanent position down the road. Learn your French and you will be okay.
I would like to address Bill C-47, an act which has to do with taxation. If members ever listen to any of my speeches they would know that taxes and I do not mix. I recognize and acknowledge that for our different levels of government to do their work a certain amount of taxation is required.
However, let us stop to think about how heavily we are taxed, whether we purchase gasoline, wine and spirits, cigarettes or food in the form of restaurant meals, vehicles, furniture, clothing or even when we give money away.
As a leader in my community, I get, as I am sure all members of parliament do, a fair number of solicitations to contribute to fundraisers. I was solicited not long ago by a group trying to get hockey tickets for a number of young people who did not have both parents. It asked me to contribute to some hockey tickets so that these young people could enjoy the Edmonton Oilers beating someone else hockey game.
I told the group I would contribute and I pledged $50 which I think provided two tickets for these young people. Members can imagine my surprise when I received a statement from the group showing the $50 I had pledged but also showing a charge of $3.50 for GST. I was being billed a tax on my charitable donation.
The federal government, even when its citizens are giving their money away to help others, wants a cut of it. It seems to have an insatiable appetite to take away the earnings of Canadians.
Over and over again we see taxes increase. Once in a while we get a little announcement of a temporary decrease. Even now we hear much crowing from the Liberal side about the reduction in taxes. However when I spoke to people who had received their cheques in January and February, they said that their take home pay did not seem to be that much different. They wanted to know what happened to all the tax cuts they were supposed to get?
We also must remember that our taxes, when it comes to the kind of taxes we are talking about in Bill C-47, the excise taxes and the GST, those taxes are all being paid with money that has already been taxed.
I was thinking about something the other day. Given that governments need some money to run their operations, where can they get the money from? First, they can do something to earn it and, in some cases, they do that.
I worked in the mathematics department at the Northern Alberta Institute of Technology. The institute had three major divisions: the technology division where I worked as a mathematics instructor, the business division and the so-called industrial division. The industrial division, among other things, trained mechanics, carpenters and many others in the hand skill trades which are so necessary in our society.
One of the things the institute did in order for their students to have hands on experience was invite citizens to bring in their vehicles. They would only be charged for the parts because the labour was provided by the students under the supervision of their instructors. I used to bring my own vehicles in there from time to time, although in those years I did most of the mechanical work on my vehicles myself.
I remember going to the institute's barber school which trained people to be hair dressers and barbers. One could go there and get a haircut for 50¢. It was a nominal charge but at least they got some revenue and the students learned how to cut hair.
Governments could raise revenues by doing things that would actually bring in money. Occasionally governments will build roads and then charge tolls on them. In a sense that is also a way of bringing in revenue. There are many other ways but I will not give an exhaustive list of how it can actually earn money directly.
The other way governments could earn money would be through taxation, that is, by separating the citizens from part of their earnings. As I see it there are basically three main classifications. They can tax people as a proportion of what they own. The municipalities do that with property tax. If one owns a house worth $100,000 the tax assessment every year would be $2,000 to $3,000.
I have not done my calculations recently but, having lived in the same house for over 25 years, I think I have paid more in property taxes than I paid for the house. In other words, the money I paid the government in property tax is greater than the money I paid to the guys who built the house. It is absolutely crazy.
Meanwhile I paid all those taxes with money on which I had already paid income tax. Most of that money was at the marginal rate of around 50%. I earned $6,000 of which $3,000 went to the province and feds and $3,000 went to the municipal government. That means that every year when I write my local municipality a cheque for my property taxes, if I write the cheque for $3,000, there goes $6,000 of my earnings. It was $6,000 of my earnings in taxes and yet all it shows is that I paid $3,000 in municipal taxes.
All hon. members here will be very pleased to know that I have introduced a private member's bill that would at least take the first step toward providing an exemption from taxable income for money that people earn to pay their property taxes. My principle is that Canadians should not have to pay taxes on money they earn for the sole purpose of paying taxes.
I am very unlucky because my private member's bill has never been drawn. My bill has been languishing in the bottom of the barrel. I would just love to have it debated and made votable. I would love to hear the members on the other side say that was a huge injustice.
If I included the amount of money I paid in property taxes with the amount of income tax I paid in order to make the money to pay those property taxes, I would have paid twice as much in taxes as I paid for the house. Of course we still have the house but it is very decrepit because I cannot afford to do upkeep due to all the taxes I have paid.
I am talking about Bill C-47, a bill that would change some tax rules. What the parliamentary secretary was very careful to keep a secret was that it would also increase taxes. I listened carefully to his entire speech and I do not remember hearing him say that as a result of these changes we will be able to suck out of Canadian taxpayers another quarter of a billion dollars, because that is what it is.
Our estimate is that this measure will result in increased tax revenues to the federal government of around $250 million. That is $250 million that will not be available to homeowners. It will not be available to moms and dads who are trying to provide for their families. It will not be available to good Canadian citizens who would love to give to charity but cannot because after they their tax bills most families hardly have enough money left to allow them to be truly charitable.
As an aside, the Liberals have a flawed reasoning when it comes to their taxation system. They claim they are justified in taxing people and then giving back to others who need it, people who make films, people who build airplanes, people who hire factory workers in Mexico to build buses that go to Kentucky and things like that. Liberals think they are justified in taking money away from all of us because we are inherently a generous people. There is a flaw in that argument.
I grew up in a family where that was practised. I have tried to be generous myself and I have tried to teach my children to be generous and charitable. If the Liberals really believed it and if the socialists really believed it, then they would not need to tax the dickens out of us because as generous people we would in fact help those people in need. We always did that.
I grew up in Saskatchewan in the rough years. Neighbours were always helping one another. It did not matter if it meant half a day of one's time. Sometimes someone would give a neighbour a ride to visit somebody who was ill in the hospital because that neighbour's vehicle did not work. My dad would pick people up and take them to the hospital. Things like that were always done.
Lo and behold, along come the socialists, the Liberals, who do not really think Canadians are generous. They take our money, whether we want to give it or not, and redistribute it. Meanwhile, they manage it in such a way so as to provide enough good slush funds in different areas to get re-elected in those ridings. I find that very offensive and so do most Canadians when they stop to think about it.
One form of taxation is property taxes. This involves taking every year from citizens a portion of what they own. In the business field there is the capital tax. That tax affects businesses, corporations and banks. Every year they have to pay into the public coffers a proportion of their capital inventory. No wonder businesses want to move to Mexico to build buses. No wonder they want to move to Ireland to invest there.
In Canada, businesses pay like crazy through the nose. Even when they buy equipment and once it is owned, they still have to pay the federal government an annual capital tax on it. That tax is in addition to any machinery tax that the provincial government may want. It is in addition to any tax that a municipality may level based on property value.
We have all these taxes that very frankly are a tremendous drain on our economy. They are a tremendous disincentive both to individuals and to businesses. We should be looking at ways to reduce that tax burden. Would it not be wonderful if Canadians could keep 90% of their earnings. If they earned $1 they would get to keep 90¢ of it. That would be great.
Before I got into politics, I was an ordinary person on a professional income. With my two degrees, I worked as an instructor. My wife and I made the decision that she would be a full time mom when our kids were small. We were struggling continuously to balance the budget.
I found it very distressing that I could not make ends meet. One day I figured out why. I earned $10,000 approximately five or six years into my career. The federal and provincial governments took about half of it, which left me with $5,000. We were told that we should put approximately 10% of our earnings away for future retirement.
My wife was not gainfully employed. She did not get paid for her labour although she worked in many instances as hard or harder than I did. She was not able to contribute to any pension plans or anything like that so I put some money away for our retirement. If we take the 10% away it reduces the $5,000 to $4,000.
I have always believed in charitable organizations and charitable contributions. For many years I used the rule of thumb of donating at least 10%. I would do that as an obligation.
It struck me one day that the reason we were having trouble making ends meet was that we were trying to live on 30% of my income. Some 50% was taken by different levels of government and the remaining part was taken through choice. We need to ease the tax burden on Canadians.
I have made allusion to other ways in which governments separate taxpayers from their money. Either they are taxed on a proportion of what they own, taxed on their income, or taxed on what they spend. Incredibly the federal, provincial and municipal governments are in collusion to make sure that all of us are burdened, stooped under a load of excessive taxes. We are taxed at all three locations. They tax us when we earn our money. They make us pay taxes on our properties. Business owners pay capital taxes. Then when we spend money to buy our kids some new clothes, we pay the GST and in most cases a provincial sales tax.
No wonder our families have problems. I read in a book that the greatest stress on marriage is inevitably financial. That is most often what leads to conflict and stress among married couples. With our taxation level and regime it is amazing that any of our families are surviving.
I was elected in 1993. Among other things my mandate was to work for lower taxes, and it still is. I believe very strongly that as individual members of parliament we need to do everything we can to reduce the tax load to leave more of the earnings in the pockets of the people who earned it so they can provide for themselves and their families. That is very important.
I want to say something specifically about the measures before us. I appreciated the speech given by the parliamentary secretary. He did a reasonably good job of going through the details of the bill and outlining its various measures. I will not bother repeating the details but I would like to bring a few issues to our attention.
It is interesting that work is being done to streamline the production of wines and spirits, the work of the vintners and distillers who produce alcoholic beverages. They want to make it more efficient. I have to applaud that. We know that our standard of living is inextricably linked to productivity in our country. Our productivity is greatly held down by all the administrative and regulatory regimes and taxes of the governments. I used the word in plural there because it is true at all three levels.
It is an admirable goal to streamline all these measures and bring them together. Presently there is an Excise Act and the Excise Tax Act. This is the first step, as I understand it, to bring those measures into one act which will be called the Excise Act, 2001. It happens to be 2002 but so be it. That will be its label.
I agree with some of the regulatory measures that are being taken. The parliamentary secretary mentioned the need for distillers to have at their expense government inspectors on site all the time. That is a regulatory expense which possibly should be changed to make us all more efficient.
As for colouring pipes certain colours I think they do this in most chemical operations. In a way producing alcoholic beverages is a chemical operation. I think it is a biochemical operation. We should let them do it if they want to do it, but we should not require by government that their pipes have to be a certain colour. That needs to be fixed. It needs to be modernized by all means.
When it comes to these taxes on alcoholic beverages, wines and tobacco I follow my father's footsteps in one regard. When a tax is levied we have a choice. We can choose not to pay it.
My father and mother taught us that drinking alcoholic beverages was not necessary and had inherent dangers if taken to excess. Neither of my parents ever drank or smoked and for some reason I picked that up as being a pretty smart thing to do.
I sometimes look back now still amazed at how insightful I was as a teenager when many of my friends were succumbing to group pressure. Some of them have since died because of either their addiction to alcohol, in some cases due to accidents caused by alcohol, or due to cancer caused by smoking cigarettes.
I have other problems. However my parents said this was a tax they would not have to pay so they did not bother buying that stuff. They not only saved the expense of the original purchase but also the taxes on it.
My dad did the same when the Mulroney government brought in the much hated GST. It is remarkable that sales tax, the GST, still resonates with people. A couple of weeks ago I saw an ad in the newspaper indicating no GST. The ad could just as easily have said 7% off everything, but they get way more attention because people say they hate the GST and will go to that store on the weekend to buy something if they do not have to pay the GST. I could use a word that would be unparliamentary which I normally do not use anyway, but other people sometimes use it when they talk about the GST.
When the GST came into effect my dad who used to trade in his car every three or four years said that was one tax he would not have to pay. He kept his car. I wonder how much that was replicated across the country when people made a decision not to make a purchase because the tax was a disincentive. We need to recognize that those taxes are a great disincentive.
Throughout our lives my family and I have not really become directly involved in the taxes we are talking about today because we buy neither alcoholic beverages nor cigarettes. However it does apply to many Canadians.
We should be aware of the fact that in this case the government will be increasing the taxes on cigarettes. As I mentioned earlier, the tax measures in the bill are to provide the government with an additional $240 million to $250 million.
Cigarette taxes in Quebec are to go up by $2 per carton, $1.60 in Ontario and $1.50 in the rest of the rest of the country. One may say that it does not seem to be fair and that the government is picking on Quebec. Why is it increasing the taxes in Quebec so much more? It is simply bringing Quebec into line because members will recall that back in 1994 or 1995 there was a big push to try to reduce smuggling. The government of the day decided it would reduce the smuggling of cigarettes by reducing taxes. If it reduced the taxes it would be able to--
Excise Act, 2001
Paul Szabo Mississauga South, ON
Is that a question?
Excise Act, 2001
Ken Epp Elk Island, AB
There are no questions in my speech. The government reduced the taxes to reduce smuggling, the assumption being that if people who wanted cigarettes could buy them commercially at a competitive price instead of buying them from criminals, they would buy them commercially and the criminals would be out of business.
I do not know whether the government has now computed that the criminals are all out of business and will not get back into business, but now it is increasing prices again.
The reason that Quebec's increase is greater is that back in 1994 or 1995 the tax decrease to that province was greater. The government was targeting the areas where most of the smuggling took place. The government is bringing the tax levels back up to where they were before and the differentiation between the different regions of the country is simply to re-establish that the costs will be equal across the country.
I do not have any firsthand knowledge of this point, but a researcher indicated that the cost of a carton of cigarettes would bring in $6.85 in federal excise tax and $5.50 in excise duty, making a total of $12.35 per carton in federal taxes. I think that is absolutely incredible. I wish people would be like me and avoid the tax entirely. Given that they will pay it, I would be very pleased if we would have a lower rate of taxation for them. Plain and simple, I think the government is not entitled to that much money because a person buys a carton of cigarettes. It is a very high rate of tax. I dare to speak out of both sides of my mouth, but maybe we should increase the price even more.
Excise Act, 2001
John Bryden Ancaster—Dundas—Flamborough—Aldershot, ON
Mr. Speaker, I rise on a point of order. I apologize to the member opposite for interrupting him, but this is an opportunity that I would like to bring forward to seek unanimous consent to make my private member's bill, Bill C-391, votable.
The member who was speaking will appreciate that it is very difficult to make bills votable. This is a bill that would amend the oath of citizenship and bring in the principles of the charter of rights and liberties. I would seek that unanimous consent.
Excise Act, 2001
The Deputy Speaker
Does the hon. member for Ancaster--Dundas--Flamborough--Aldershot have consent of the House to propose the motion?
Excise Act, 2001
Some hon. members
Excise Act, 2001
Some hon. members
Excise Act, 2001
David Anderson Victoria, BC
Mr. Speaker, I rise on a point of order. I am just wondering if it is relevant at all to note that it was the government members who opposed the request.
Excise Act, 2001
The Deputy Speaker
I hope the hon. member will not be too shocked when I inform him that is not a point of order.
Excise Act, 2001
Ken Epp Elk Island, AB
Mr. Speaker, I was talking about the taxes on cigarettes being a disincentive. I think especially of those in my knowledge who have succumbed to illnesses caused by cigarette smoking, both heart disease and lung cancer. Those are not good ways to die. It would be a lot better if the use of tobacco were reduced. Whether taxation is the way of doing that I do not know. Generally the principle in my mind is we ought not to use tax policy to drive social behaviour. I think that is an improper mix.
Excise Act, 2001
The Deputy Speaker
It being 1.30 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.
Private Members' Business
Paul Forseth New Westminster—Coquitlam—Burnaby, BC
moved that Bill C-304, an act to amend the criminal code (prostitution), be read the second time and referred to a committee.
Mr. Speaker, I am presenting Bill C-304, an act to amend the criminal code (prostitution). First reading was deemed to be March 19, 2001. In the summary of the bill it states:
Under this enactment, the offences related to prostitution that are provided for in section 213 of the Criminal Code from now on will be either indictable offences or summary conviction offences.
My private member's bill is deceptively simple. It is a minor technical point in the criminal code, but it is my belief that the clarity and improvement it makes can bring a significant positive result for communities to take back their streets, for local merchants to have their sidewalks back again and for parents to renew their confidence in the safety of local schoolyards.
However, the main reason I am bringing the bill forward again is that it addresses the main point of the ease of access for juveniles to get involved in the sex trade in the first place. My bill would mitigate against children getting involved in the beginning. It is about crime prevention.
Bill C-304 would amend section 213 of the criminal code to change the kind of process available against a person being investigated for talking in a public place about buying or selling sex. It would change the street prostitution section.
I propose making the existing offence a hybrid or electable offence so that an investigator can proceed either summarily or under the rules of the list of indictable offences. Critics wrongly get hung up on the theoretical higher penalty from the indictable route, which of course is never applied, rather than the process and identification tools which is what the bill is really all about.
In Canada it is a criminal code offence, a crime to buy and sell sex in a public place such as a street corner, a taxicab, a bar, a pub or a hotel lobby. That is the law. We have had a national conversation about whether that kind of activity should be controlled by criminal sanction and, consequently, it is a crime.
It is also a crime to live off the avails of prostitution, to be a helper or employer to benefit from the trade, or to keep a place of prostitution. Involving juveniles is a very serious crime. However, existing rules for the streets seems to approve in a backhanded way.
The private act of prostitution itself is not a crime. I do not know why it is not a crime, as the history of abuse, exploitation and degradation associated with those who tend to become sex trade workers appears to be condoned here in a double standard. However, that is a completely different debate and beyond the scope of what I am trying to do here today.
I am sure that I will hear from my critics a reference to that false argument to cover their own lack of courage to act, and their lack of understanding of street realities. I have observed that a helpful procedure is to respond more directly to the street trade in prostitution. Capacity creates its own demand. If there were no buyers there would be no sellers, and if there were no sellers there would be no buyers.
We have a societal problem. Mitigating against exploitation is historically the Canadian way. We must provide the legal symbols which provide the appropriate social context for citizens to voluntarily do the right thing, while we defend the helpless and help them, rather than allow them to be exploited.
My proposed change is important for broad societal reasons. There is a national problem of street prostitution across the country that did not exist in such a pervasive way just a few years ago. Since the advent of the charter and the repeal of vagrancy laws the legal capacity has created its own demand. Whenever we create a loophole for the perverse the legal vacuum is soon filled.
Street prostitution goes far beyond just being a local nuisance. Wherever it takes a foothold the surrounding communities soon learn that the drug crowd follows, as does breaking and entering, theft from cars and an attraction of those with criminal histories. All these become entangled in the culture of the street. These trends develop wherever prostitution is openly traded. It is a money producing activity that supports organized crime, the drug trade and the foreign trade in people. It is a sad fact that our pathetic law gives an opening for international operatives to exploit.
Communities are victims too. Mothers do not appreciate walking their children to school over needles and condoms along the schoolyard fence. Merchants should not have to patrol their front sidewalk and doorways cleaning up after the night trade.
However, the fundamental point I observed as a probation officer before I came to this parliament attempting to bring social services to bear to individuals caught up in this sad cycle is that street prostitution itself is the wide open door for the young to become involved. That is my main point.
It is an issue of crime prevention. Runaway children can too easily stand on a street corner and get involved in prostitution as a way to support themselves. The wide open door and the legal and social tolerance of street prostitution is a major source of the national problem, how it is fed and kept going.
My experience in attempting to help young people in conflict with the law and those who were on the street made me acutely aware of how the summary conviction status of communication for prostitution was so much in conflict with all of our concerns and expenditures to help street kids preserve the peace and safety of our neighbourhoods.
Politicians on the Liberal government side have in the past been very sanctimonious about juveniles and prostitution. NDP members also talk about the awful violence against sex trade workers and claim to be concerned about children on the street. Yet historically they have resisted suggestions to mitigate against allowing kids to be on the street supporting themselves through the sex trade.
This is not a new problem. Today we in parliament after years of talk are still dithering about this matter. Past Liberal justice ministers have not responded to my requests. Moreover, previous Conservative governments were no better. There were reports and plenty of consultation but during their tenure the whole prostitution file was not effectively dealt with. Even worse the NDP appeared to support prostitution itself through the advocacy of what it affectionately called sex trade workers. I believe the NDP would like to unionize them and give them police protection right on the street as well as employment insurance.
I come from a different perspective, one that is rather pragmatic. We may not like prostitution in society. We also may not like the overwhelming violation of rights it might take to eliminate most of it. Nevertheless, as parliamentarians we also do not need to pave a golden street for the sex trade to flourish. Therefore, as an interim measure we need to pass my bill so we can get on with the more important comprehensive measures that the government claims it is considering and that the justice department has been studying for years.
Prostitution is exploitive and a lot of other crime and degradation seems to go with it, especially the drug trade and drug abuse. All these tragedies are tied together so there are practical reasons to have the public communications section of the code made as flexible as possible in its application.
The police are also using sections of the code to sometimes issue what is called a no go order for repetitious, obnoxious and aggressive prostitutes who are leading the trade and shepherding others into the trade to be subject to geographic prohibitions of not entering into common strolls. If the recognizance is breached it becomes an offence and is easier to enforce than gathering new evidence under section 213 every time. These restrictions are time limited and tied to the process of other charges, hence, of limited value.
Although section 213 is gender neutral, gathering evidence against buyers is somewhat difficult. Police are unlikely to assign much of its precious police time resources to respond to a problem if the offence is only a summary one and after the expenditure of thousands of dollars in enforcement routines only results in an occasional charge and nets the perpetrator a $100 fine which becomes just another cost of that kind of nuisance.
Flexibility rather than a heavy-handed approach is what I am promoting. The change would allow, if needed, to fingerprint and photograph if cases were proceeded with through the optional indictment process. It would be used as needed and would form part of a broader tool kit of resources that would support crime prevention objectives. It would greatly enhance breaking the cycle of lifestyle for some youths and more effectively get them into community remedial programs. My change would support social programs that focus on deeper causes.
We must have the political courage to intervene so that the inherent discretion that lies throughout the justice system can flexibly respond to the individual need.
In the 1995 interim report of the federal-provincial-territorial working group on prostitution the results of national consultations indicated several recommendations to combat prostitution, one of them being the change to section 213. The deputy minister of justice of the day established the working group in 1992 from the federal, provincial and territorial governments. The most important factor for change was not to punish prostitutes but rather for identification purposes. In many cases prostitutes use false identification. Many in Vancouver and Toronto are not Canadians and are not in the country legally. It is a serious immigration problem which my bill would address.
The Identification of Criminals Act states that fingerprints and photographs cannot be taken when a person is charged summarily. With fingerprints and photographs police would be able to track down runaways and to clear the backlog of outstanding arrest warrants of prostitutes who have used false identities. It would solve some serious crimes. It would send a most necessary and needed message to the community, to both customers and sellers, that such acts are not to be taken lightly and that they are not in society's interest. We would not likely have some 50 dead street workers in Vancouver if my provision had been in place over the last few years.
The response from the working group on this matter stated that the identification of prostitutes, along with the use of false identities, was considered a serious problem by law enforcement agencies and prosecutors, one which might have been solved with such amendments. The ability to fingerprint and photograph would make it easier to identify and prosecute repeat offenders.
Something most people are not aware of is that many street prostitutes are runaways living under false names and identities. They become involved and perhaps trapped in a dangerous subculture. Parents of these children desperately want to find a way of tracing their children's whereabouts but because of false identities little can be done. They desperately want to find a way to bring their children home.
The research that has been done on street prostitution suggests that decisions to enter into the prostitution trade are decided in the time of youth. In 1984 the Badgely committee on sexual offences against children and youth found that of all the prostitutes interviewed 93% of females and 97% of males had run away from home.
In another report, a 1990 journal of Canada's Mental Health , authors Earls and David found that the average age of female prostitutes leaving home was 13.7 years.
People who support the sex trade say it is really not a big problem and that politicians are blowing it out of proportion. I have three comments from those affected by street prostitution. The first is from a Vancouver resident:
When prostitutes operate openly in a neighbourhood, all women in the area become targets for cruising johns in cars or on foot. Soon every female from 8 to 60, from your daughter to your mother, will have been on the receiving end of some sort of disgusting advance from a stranger while walking to the store or playing in the park.
The second is from a Toronto resident:
My apartment has become a refuge from streets which become enemy territory every night, streets where I am approached by drug traffickers, accosted by cruising johns and insulted by hookers; streets where menacing groups of young people take over the corners to haggle over drug prices and yell out to people in passing cars.
Appearing before a parliamentary committee in 1989 the former mayor of Toronto and current Minister of National Defence stated:
I support these changes to Bill C-49 as well as other recommendations our police are putting forward to help us once again regain control of our streets, namely that this offence be changed from a summary offence to a hybrid offence requiring that those arrested be fingerprinted and photographed, which is important in dealing with runaways who can change their identities and their names, and others who are trying to avoid prosecution, and that it remains, in addition to that, within the absolute jurisdiction of a provincial court judge.
The Minister of National Defence clearly stated that such a small change to the criminal code could make a huge difference in the fight against street prostitution. I hope he will be a man of principle and lean on his cabinet colleagues to help me so that we can all do the right thing.
In 1995 the justice minister introduced an omnibus bill that touched on the criminal code changes to prostitution. Unfortunately section 213 was not changed. Today communication offences are still mere fines or slaps on the wrist. Street prostitutes are not afraid of being caught nor are they deterred in any way to give up this dark and sad way of living. Their controllers are also allowed to continue their exploitation.
I advocate the passage of my bill for several broad reasons. There are symbolic sociological and national policy reasons why we should do this.
In addition, the local communities most affected are aghast at the lack of action to preserve the safety of their neighbourhoods. We can do it for them. We can do it for our children. It is important that we act on behalf of victims, whether those trapped in the lifestyle or those in the community.
Administratively we need to provide more flexible tools for police officers so they may exercise discretion in dealing with local variances and emerging problems. Moreover, we need to narrow the door which permits kids to get involved in prostitution in the first place and provide other legal ways to get them into social services.
In closing, I ask members of the House not to obfuscate and confuse what I am talking about. I ask them not to get off track by talking about the generalities of prostitution in society, violence against women, developing legalized brothels or any of the related topics not appropriate to the narrow proposal I have brought forward to the House.
My bill is a small technical amendment which could help victims and bring safety to our neighbourhoods. I hope it will receive non-partisan support in that light. It is time we had the political courage to act. Our communities which have sent us here expect no less.
Private Members' Business
Paul MacKlin Parliamentary Secretary to the Minister of Justice and Attorney General of Canada
Mr. Speaker, I am pleased to have the opportunity to speak to Bill C-304.
In a nutshell, subsection 213(1) of the criminal code makes it an offence to communicate in a public place with any person for the purpose of engaging in prostitution. Currently the offence under section 213 of the criminal code is punishable on summary conviction. The sentence is a fine of not more than $2,000, imprisonment for six months, or both.
The amendment proposed by the hon. member for New Westminster--Coquitlam--Burnaby would classify the offence as a hybrid offence. Hybridizing offences results in potentially increased penalties. This offence, punishable today by a maximum sentence of imprisonment for six months, would become punishable by imprisonment for up to five years as a result of the application of section 743 of the criminal code.
When the legislation containing this provision was first introduced in the House of Commons the Hon. John Crosby was Minister of Justice. He said the purpose behind the legislation was not to deal with all the legal issues connected with prostitution but to address the nuisance caused by street prostitution. He sought to balance the concerns of law enforcement agencies, citizen's groups, women's groups and civil libertarians.
Section 213 is intended to assist in dealing with the nuisance problems experienced by neighbourhoods affected by street prostitution. Making the offence punishable by five years would be going too far. Similar offences such as causing a disturbance in a public place are summary conviction offences.
Another possible underlying purpose for making a section 213 offence a hybrid offence is, as the hon. member mentioned, to permit the fingerprinting and photographing of persons charged under the section. As a hybrid offence the Identification of Criminals Act allows fingerprinting and photographing only in the case of offenders accused of committing indictable offences pursuant to the federal Interpretation Act. Hybrid offences are interpreted in that fashion.
Some seem to believe fingerprinting and photographing would act as deterrents for persons charged under subsection 213(1). However experience has shown it is not necessarily so. In addition, converting section 213 into a hybrid offence would allow police officers to proceed with arrests whenever they had reasonable grounds to believe an offence had been committed or was about to be committed.
In the case of a summary conviction offence police officers cannot arrest until they find a suspect committing an offence. Increasing police powers would likely lead to increased enforcement and ultimately the displacement of prostitutes to more isolated and potentially dangerous areas where their lives would be at greater risk.
It is important to realize that making subsection 213(1) a hybrid offence could open the door to engaging the more onerous criminal procedure associated with indictable offences and thereby create an added burden for the courts. This would have to be avoided by explicitly keeping the application of section 213 within the absolute jurisdiction of the provincial court.
For these reasons subsection 213(1) of the criminal code should not be amended.