Debates of April 26th, 2002

Excise Act, 2001

[An hon. member]

Like Quebec.

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

Yes, like Quebec. That is right.

Smoking is of great concern to us, not purely from the perspective of health costs for the province, but from the human and social costs exacted on families and communities and the great loss of human potential. I commend the Nova Scotia government of Premier Hamm and his health minister Jamie Muir for their courageous efforts to reduce the incidence of smoking particularly among youth.

In a general sense, the term sin taxes is used with respect to tobacco and alcohol, wine, beer. It is a little harsh to call them sin taxes. We should be a little more ecumenical in the way we approach these sorts of things.

In some ways we should deal with tobacco, particularly cigarettes, in a different way than we deal with alcohol, particularly wine. As many of us realize, wine in moderate consumption is actually a positive health factor. Perhaps something I share in common with some of my colleagues from Quebec is an understanding of the relationship between the moderate consumption of good wine and the augmentation of one's health and longevity. Even if we do not live longer, we are certainly happier during our lifetime, which means something.

We ought to be dealing with cigarette taxes in a different way than we deal with taxes on wine or beer. In many ways wine and beer are very different from hard alcohol and spirits in terms of the nature in which they are consumed. Some people can consume alcohol in moderation and some people cannot. There is a difference.

Beyond that there is no doubt that raising taxes on cigarettes will have a positive impact in reducing the incidence of smoking. It has been clearly demonstrated that it will make a significant difference which is a good thing.

The government ought to work harder on smoking cessation on a national level. As well it should work with the provincial governments. It is very important to focus on the education side. California has been the leading U.S. state when it comes to educating people about smoking. The California government found that efforts focused on the education side of reducing smoking have been significantly more effective than tax efforts and some of its other initiatives.

Education can be extremely effective. Given the degree to which the provinces are charged with education, the federal government ought to work with the provinces. It should work with the provincial health ministers and the education ministers to introduce a more effective pan-Canadian approach through education in our school systems to reduce the incidence of smoking.

Recently I heard the Minister of Health speak about the importance of other lifestyle issues. She was speaking of fitness and levels of obesity in Canada. It seems counterintuitive in some ways if we consider that we live in an age when now more than at any time previous Canadians are more aware of food and the differences between healthful eating and less healthful eating. There were not fitness centres in every town or community 20 years ago. Today there are fitness centres everywhere and people are joining these fitness centres, at least in January; they may not go after February but they are joining. There is a greater consciousness in terms of health issues than has existed in the past.

When we go to a grocery store today the options in terms of low fat or non-fat, low flavour or non-flavour eating have never been greater. It seems in some ways inexplicable that we see greater levels of obesity, particularly with youth, than have existed in the past. Whether it is sedentary lifestyles we are seeing or perhaps the fact that extracurricular sports are receiving less funding on the provincial side largely because of the cutbacks on the federal side to the provinces, perhaps we have to address those issues as well.

I think that increasing excise taxes on cigarettes, booze and wine is pretty easy for the government, because the government finds raising taxes easy at any time, but I think it should find ways through creative and innovative policies, best practices and looking at jurisdictions around the world to address a lot of these other health issues, not just simply those where it sees an opportunity to raise taxes.

Further to some of the specific discussion around the application of these increased excise taxes to the duty free shops, I do not believe that these increases in excise tax should apply to alcohol and cigarettes sold in duty free shops. Duty free ought to be exactly that. Duty free is a different market. It is an important industry and employs a lot of Canadians. First, I think it is inconsistent with the nomenclature of duty free, but it is also extremely damaging to that important industry. As a trading country, if we are to take seriously the practices of other countries in terms of duty free and the competitive issues, it is clearly wrong-headed for these excise tax increases to apply to the duty free shops. I would argue that it is a mistake.

The argument that we need to address the tax disadvantages that our Canadian microbrewers have over their competitors elsewhere is a very important argument. Our Canadian microbreweries are at a competitive disadvantage due to our tax regime when compared to their counterparts in the U.S. There has been a significant growth in microbreweries in Canada. Aside from the jobs and the entrepreneurialism generated by microbreweries, there is another very important argument why we should defend them. Their beer tastes better. I think there are probably many in the House who would attest to the fact that microbrewers do produce good beer. I cannot myself, naturally, because I am hardly old enough to be able to consume alcohol legally.

I would argue that all other public policy criteria aside, I think sometimes we in the House should stand up for better tasting beer. I think Canadians deserve this--

[An hon. member]

They deserve no less.

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

They deserve no less, my colleague from the New Democratic Party has just told me, particularly now on a Friday when our hearts turn to the weekend. I think that Canadians watching CPAC today would agree with me that this is a public policy issue.

I see our pages in the House today. If we consider the interests of our young people, our pages and university students as they go forth and get older, I am sure the members opposite would agree that they should not be wasting their lives on bad tasting beer from large scale commercial breweries.

In a serious sense, I do commend the government for having addressed the health issues of cigarettes and the excise taxes on cigarettes. I do think we have to become a heck of a lot more innovative and creative than we have been in terms of creating public policy that is effective in reducing the incidence of smoking. Again, we have to treat moderate wine and alcohol consumption very differently from cigarette consumption. One cigarette is bad for the health but one glass of wine is not, unless one has an addiction. I would argue that we ought to be treating these a little differently.

In a general sense I do wish that we would see not just the government's predilection to increasing excise taxes but an actual tax reform package from the government focused on a wide range of issues such as that of enhancing and improving productivity. Our declining productivity levels, particularly the degree to which productivity growth in other countries has exceeded that of Canada, has had a very negative impact on our standard of living and quality of life and threatens significantly the standard of living we can depend on as we move forward.

The Canadian dollar has lost 20% of its value compared to the U.S. dollar since 1993, largely based on the fact that our productivity levels have been slipping compared to those of our largest competitor, the U.S. The Prime Minister says that it is all right, that our currency is doing better compared to some other currencies such as the ruble, but the fact is that given the degree to which our trade is focused on the U.S., the only comparison that really matters is the one with the U.S. Even if we look at some of our other trading partners like the U.K., our dollar has lost 15% under the government's watch against the pound sterling. Our dollar is doing badly compared to the Mexican peso, that great bastion of fiscal fortitude.

When we see a drop in the value of our Canadian dollar, it is a pay cut for every Canadian. The Prime Minister has stated that a low Canadian dollar is good for exports. Of course the logical corollary of that argument is that if we reduce the dollar to zero, Canada could be the greatest exporting nation in the world. That makes about as much sense as the Deputy Prime Minister when his industry minister made the statement that high taxes were good for productivity because they would make Canadian businesses and individuals work harder.

In a general sense I wish the government actually would address issues of tax reform focused on productivity, regulatory reform focused on productivity, interprovincial trade barriers that impede productivity, and the 10 different securities commissions in Canada, which are a bane to raising capital for growth and expansion. I wish the government would start thinking about some of these issues and be a little more proactive as opposed to always reacting to polls in responding to the challenges and opportunities that face Canadians as we look forward to what is an exciting but universally accepted as a more competitive century ahead of us.

[Darrel Stinson, Canadian Alliance, Okanagan—Shuswap, BC]

Madam Speaker, knowing the government's insatiable appetite for taxation, we should have more concern about this than just saying it is a health issue or some other issue. When we look at increasing taxes, particularly on alcohol and tobacco because they are easily exported, does the hon. member not have some concern of a black market creeping in that will be far more costly to regulate than what the government is setting out to do here?

Would it not be better if the government were to put some of these funds into education? Would it not be better to go to the schools and show a cancerous lung and a clean lung? I speak as a smoker. I am sure if we were to show grade 5 or grade 6 students what a cancerous lung looks like compared to a healthy lung it might impact upon them, whereas I never had that chance.

Would it not be better to take someone who is suffering or dying from asthma or cigarette lung disease into the schools to talk to the children? Would that not have a bigger impact than putting taxes on a product? Young people do not understand what taxation is and they are still going to steal a cigarette. Would the hon. member care to comment?

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

Madam Speaker, I agree with the member that we must do more on the education side. We should be taking a portion of these excise taxes and using them exclusively for education, focusing on youth in particular.

I urge him to consider carefully the notion of cutting his lung out and taking it around to schools. It would be difficult for him to accomplish the latter if he performs the former. However if he is looking for a volunteer to help carry his lungs around I can help depending on whether I have the time.

There is the issue of photographs on cigarette packages. The law of unintended consequences sometimes says that one of the best ways to get teenagers or youth to do something is to tell them to do the opposite. It is perverse to even consider in some ways but I would bet that today there are probably young people, in schools or outside of schools, collecting these cigarette packages and trading gangrenous feet for cancerous lungs and that sort of thing. In all honesty, nothing makes a young person cooler than being told that it is absolutely wrong to pursue a particular behaviour. Of course I was a well behaved young person, as we know.

The issue of the black market is another important issue; it is not just black lungs. The government is ignoring the fact that if it were to raise taxes beyond a certain level there would almost definitely be a greater level of black market activities. I hope that does not happen.

[An hon. member]

It will.

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

Perhaps it will, but I still believe that higher cigarette taxes at the end of the day will reduce the incidence of smoking among young people. Perhaps there will be some incidence of black market increase but on the whole this is one tax increase that may actually be almost supportable based on its impact on reducing smoking.

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

Madam Speaker, I am pleased to speak on behalf of the people of Cariboo--Chilcotin as we address Bill C-47, a bill amending the Excise Tax Act.

The Canadian Alliance is dedicated to reducing the size and scope of the federal government in order to deliver meaningful tax relief to hardworking Canadians.

Canadians face many difficulties inherent in complying with regulations and remittance schedules, often without keeping in mind the peace, order and prosperity of our citizens. Yet millions of Canadian small and medium size businesses prosper in spite of the federal government's insatiable appetite for tax revenues. We are severely overtaxed so I welcome the opportunity to participate in the debate today.

The official opposition supports the legislation. It has been endorsed by industry stakeholders. It modernizes the framework of excise taxation in wine, spirits and beer. This support is rare for the Canadian Alliance as we are opposed to the government's intervention into Canadians' freedom of choice by enforcing such a heavy burden of taxation. However, these proposals aim to replace existing old and antiquated administrative and enforcement structures governing alcohol and tobacco products with a modern regime reflecting current practice.

The bill does not address tax rate and base matters other than to ensure equitable treatment between domestic and imported products.

We have been talking about the various benefits of wine, beer and spirits. I appreciate what the hon. member had to say about the benefit of a glass of wine and perhaps the same can be said for beer.

I remember reading an article not too long ago in a magazine or a newspaper, I am not sure which, in which it stated that moderate drinkers have a higher income than abstainers or non-drinkers and immoderate drinkers have even higher incomes than moderate drinkers. I am not sure if that was an indication that people are not drinking enough. However, I do have to say that I worked on the streets of east Vancouver in my younger days and I saw some very heavy drinkers who were extremely poor. Therefore I am not sure of the benefits of alcohol consumption except as perhaps a doctor would prescribe.

The proposed act shifts compliance and point of taxation from sales levy to production levy for the production of wine, and this is already the case for distillers.

The changes introduced for spirits and wine are regulatory in nature and tax neutral. The prime purpose of these changes is to modernize how these products are taxed in order to allow distillers and vintners the greatest flexibility in their production practices and to ensure an internationally competitive tax regime .

From an industry perspective, the proposed legislation also provides for an appeal and assessment process. Previously industry had no recourse against government impositions if they felt unjustly treated.

The motion also contains significant enforcement tools to crack down on contraband products. This is a major feature of the proposed legislation and is welcomed by the industry.

Changes in the act make it easier to enforce existing laws and provide stiffer penalties for conviction. For example, under the proposed legislation the maximum fine for producing contraband alcohol would be fines up to $1 million and up to five years in jail for indictable offences. These are industry led changes and it is proposed there would be no losers because of the legislation, with the exception of those who produce contraband products.

Considering tobacco, the second aspect of Bill C-47 does have problems. The bill seeks to increase federal excise taxes on tobacco products and to re-establish a uniform federal excise tax for cigarettes across the country of $6.85 per carton. The stated purpose of this tax increase is to improve the health of Canadians by discouraging tobacco consumption.

The government proposes that the federal excise taxes on cigarettes will increase $2 a carton in Quebec, $1.60 a carton in Ontario and $1.50 a carton in the rest of Canada. This would bring the total federal excise burden on cigarettes to $12.35 a carton.

Never to leave itself out whenever there is the remotest possibility of collecting further taxes, federal revenues will increase by approximately $240 million a year through the tax hike. Just a few minutes ago my colleague whipped out his calculator and averaged this out to a $657,000 per day increase in revenue for the government.

What about reducing smoking? This apparently is the reason for the tax hikes. Like everyone else, I want Canadians to live a healthier lifestyle. I want this especially for our youth who really do not know what they are doing when they get involved with smoking.

Reducing teenage smoking is a worthwhile goal. I am pleased when I see a government ad on television once in awhile encouraging young people not to smoke. Some of those ads look pretty effective to me but I am not sure they have had much influence on the decisions of young people to smoke or not to smoke.

I believe that the increase in revenues should be more dedicated to the decreasing of smoking in a way that would be more effective than simply raising the taxes. The past decade has proven that high levels of excise tax on cigarettes do not reduce consumption. What it does do is create an underground economy.

A better role for the government would be to provide information for consumers to ensure that citizens have an informed choice and to offer generous assistance to those struggling to break this cruel but legal addiction. We hope the government spreads the word about the life threatening aspects of tobacco use and does whatever a government institution can do to encourage, persuade and limit the use of tobacco products that are so harmful, not only to youth but to everyone, even to those who do not use tobacco products who are perhaps allergic to tobacco smoke, as I am, and find it not only offensive but hurtful physically.

Time and again we have seen the increases in the prices of cigarettes not working for the purpose of reducing the number of Canadians who smoke. It is interesting that while the bill is heralded by the government as trying to decrease tobacco consumption by issuing a tax grab on smokers, it does not attempt to influence alcohol consumption through tax policy.

The problem with this aspect of the bill is that the government, by increasing these tax levels, is simply increasing its revenues. This cold-hearted government will do anything to increase its revenues. Increasing taxes on alcohol and cigarettes is probably the last great vista of politically correct tax increases still at its disposal.

We know the finance minister has never encountered a tax he could not raise. Canadians know that excise taxes are not dedicated to specific spending. They are not dedicated taxes, to use the jargon.

For example, the government does not use gasoline taxes to fix our highways. Aircraft fuel taxes are no longer applied to navigation services as they were intended when first applied. Pilots now pay navigation fees to Nav Canada, but with no reduction in the Nav fuel taxes that they pay when they put the fuel in their aircraft. Neither are tax revenues on cigarettes and alcohol spent on health care, at least in the amounts that would be effective in controlling, reducing and helping those who do smoke.

The funds raised by taxes are sent to the general revenue fund and used for bigger and bigger government paid for with higher and higher taxes. These cigarette taxes are just the latest tax increase. If anyone wants to bet that this is the last tax increase, I might just take that bet even though I am not much of a gambling man.

These tax dollars buy a fountain in the Prime Minister's riding, or are given to Wal-Mart to set up a store in Ontario, or buy jets from Bombardier for the Prime Minister and his cabinet. Just last week we learned that billions of dollars are spent on foundations without the approval of the House.

There is no way to scrutinize how this money is spent. Yet while federal excise revenues have increased, transfers to the provinces for health care have decreased. They have been reduced.

The Liberal government is not telling us the plans it has for using the new revenues the bill will raise. The Liberals are using this legislation, supported by the stakeholders in the industry affected by the bill, to raise more money but for still undetermined purposes. It is no wonder the Canadian dollar is sinking out of sight with such poor management. It is no wonder even while we talk about the wonderful standard of living in Canada we are watching a standard of living that has been declining.

With Bill C-47 the government is hiking taxes under the guise of tax fairness. It leaves no stone unturned in the search for more money. Everything, even increasing fairness in the way we are taxed, can be and is turned into another way to gouge the taxpayer.

Once again I acknowledge that we will support this legislation, but only because it does some small bit to afford some equality in the markets of the affected businesses.

[Jocelyne Girard-Bujold, Bloc, Jonquière, QC]

Madam Speaker, I was not sure I would have the opportunity to be heard this afternoon. So, I am glad to be able to speak today on Bill C-47. First, I would like to congratulate my hon. colleague from Saint-Hyacinthe--Bagot for the presentation he made earlier as he educated us and told the people watching this debate on television that the way the government dealt with Bill C-47 was a disgrace.

The Bloc Quebecois supported this bill until our colleague from Saint-Hyacinthe--Bagot realized, in parliamentary committee, that the die had already been cast. Instead of protecting the interests of the public, of organizations simply asking for their fair share—which is what the government was elected for—it protected the big shots who are very close to the government.

The bill did not refer to the excise tax on beer. As we all know, this bill dealing with the taxation of spirits, wine and tobacco and the treatment of ships' stores was also supposed to deal with the taxation of beer. Unfortunately, microbreweries, which are doing well and taking up 4% to 5% of the market, will not be considered as breweries. The Canadian Council of Regional Breweries finds this appalling. Microbreweries are important because they mainly operate in regions and are significantly contributing to local economies.

In my region, in L'Anse-Saint-Jean, which is located in the riding of my colleague from Chicoutimi—Le Fjord to be more precise, there is a microbrewery that was producing, a few years ago, seven different brands. Nowadays, it only brews three different brands: Illégale, Folie Douce and Royale.

Why have Brasseurs de l'Anse Inc., in the Saguenay region, had to limit its share of the market in the last few years? Because it was being treated unfairly by the government. I find it quite pathetic that the hon. member for Chicoutimi--Le Fjord, who claims to be concerned about regional development, would choose to support the member for London West.

I find what happened this week at the finance committee most inappropriate. Madam Speaker, I am also a woman. We both have a position in our society. These days, many women have careers and we see more and more women at executive levels. When the member for Saint-Hyacinthe--Bagot, my leader and the member for Roberval brought up that practice at the finance committee, the Prime Minister of Canada thought they had acted condescendingly towards women. I interpreted what he said as being contemptuous towards women in general and myself. He understood quite differently what the members of my party were saying. What he understood was not what my colleagues meant. I am a woman and if my colleagues had meant that women should not occupy important positions, I would have been the first to call them to order.

My colleagues said that the member for London West who is a woman and chair of the Standing Committee on Finance--

[Some hon. members]

Oh, oh.

[Jocelyne Girard-Bujold, Bloc, Jonquière, QC]

Madam Speaker, could you tell the Liberal member of who knows what riding that whenever she has something to say, she should rise and then put her questions?

When the member acted in that manner, she was chair of the Standing Committee on Finance.

If I were a member of a committee and had some interests, or if someone in my family had interests, I would not stay. The hon. member could have let another member of parliament sit in her place. There are so many Liberal members on that committee that she could have given up her seat and say “I will not deal with the microbreweries issue, because my spouse has a direct interest in it”. She did not do it. She continued to sit on that committee.

The hon. member for Saint-Hyacinthe—Bagot proposed amendments dealing primarily with microbreweries. The Liberal member used her authority as chair of the committee to reject the amendments of the Bloc Quebecois.

Since the last general election, since Motion No. 2, we have a new way of operating in the House. When amendments are presented to a committee, they cannot be presented again in the House at report or third reading stage.

The Liberal member knew exactly what she was doing. I find this deplorable. I really like the hon. member for London West. In the past, we have had the opportunity to discuss a number of issues. I thought she was very professional in making decisions. But now, I find it deplorable that the Liberal government would have reacted in such a fashion.

When the government reacts in such a way, when it deals like this with an issue that should be dealt in an honest and transparent fashion, and when things such as what happened occur, it means that something is going on.

[The Acting Speaker (Ms. Bakopanos)]

I am sorry to interrupt the hon. member. She will have 13 minutes when the bill is again debated in the House.

It being 2.30 p.m., the House stands adjourned until Monday next at 11 a.m. pursuant to Standing Order 24(1).

(The House adjourned at 2.30 p.m.)