Mr. Speaker, I appreciate the opportunity to speak at third reading to Bill C-47 which introduces a modern legislative and administrative framework for the taxation of spirits, wine and tobacco products under the Excise Act.
The measures in the bill address a long-standing need of both industry and government for a new excise framework. As many colleagues are aware, the Excise Act is the foundation of the federal commodity taxation system for alcohol and tobacco products. It would impose excise duties on spirits, beer and tobacco products manufactured in Canada. It would include extensive control provisions relating to the production and distribution of these products.
Commodity taxes are an important element of Canada's federal tax system. In 2000-01, for example, duties and taxes on alcohol and tobacco products raised about $3.4 billion in federal revenues. The Excise Act is one of the oldest taxing statutes in Canada. Some of its provisions date back to the 1800s and except for periodic amendments the act has never been thoroughly reviewed and overhauled. In recent years it became obvious to both industry and government that the excise framework needed to be modernized.
Industry, for example, has introduced new technology and product marketing and distribution initiatives that the existing Excise Act is not equipped to accommodate. The base of controls in the act impose high compliance costs on industry and impair the competitiveness of Canadian producers. Given the increased foreign competition in Canadian markets for beverage and non-beverage alcohol this problem needs to be addressed.
From the government's perspective the Excise Act is increasingly difficult to administer and impedes the ability of the Canada Customs and Revenue Agency, CCRA, to fully adopt modern administrative practices. Furthermore, wine which is currently taxed under the Excise Tax Act is not subject to any substantive controls on its production and possession. Tobacco manufactured in Canada is taxed under both the Excise Act and Excise Tax Act. This creates problems both for industry and government.
All of these factors point to the need for a revised excise framework which is a key component of Bill C-47. The new excise framework is a direct result of a discussion paper on the Excise Act review which the Department of Finance and CCRA released in 1997. That paper outlined a proposal to provide legislative and administrative framework for the federal taxation of alcohol and tobacco products.
The government subsequently released draft legislation and regulations in 1999 and held public consultations with all major stakeholders. During the review the government was guided by three goals: first, to provide a modern legislative framework for simpler and more certain administrative systems that recognize current industry practices; second, to facilitate greater efficiency and fairness for all the parties leading to improved administration and reduced compliance costs; and third, to ensure the continued protection of federal excise revenues.
Bill C-47 meets all three objectives. A modern legislative and administrative framework introduced in the bill would generate stable and secure revenues and also address contraband pressures. Moreover, this would be achieved without imposing unrealistic or unnecessary costs and administrative burdens on industry.
The measures relating to alcohol would include: maintaining the imposition of duty at the time of production of spirits, replacing existing sales levy on wine with the production levy at an equivalent rate, deferring the payment of duty for spirits and wine to the wholesale level, and introducing modern collection tools. At the same time the bill would help to address the government's ongoing concern over smuggling and the illegal production of alcohol.
I will discuss some of these key measures in more detail. Along with the production levy on spirits and wine that I have just mentioned the legislation would incorporate strict controls on the production, importation, possession and use of non-duty paid alcohol together with significant penalties for breaking the law. The spirits industry would no longer be hindered by outdated and onerous controls over premises and equipment. With these controls removed businesses would have greater flexibility to organize their commercial affairs to respond more quickly to market changes.