Debates of April 29th, 2002

Excise Act, 2001

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I thank the member for Châteauguay for his question. I think we have to realize--and he gave further evidence of this--that we have here a bill that has been cut to benefit private interests at the expense of the microbrewery sector.

The government should not try to make us believe anything else. The member for Châteauguay just gave us further evidence. At the outset, Bill C-47 was designed to amend the existing act, which includes the beer industry. I have no doubt whatsoever in that regard. During the process, specifically at the brewers' request, it was decided to exclude this sector. What I cannot understand is that at the same time, we are told--and the Brewers Association of Canada itself acknowledges this--that the situation is urgent. Still, the association is requesting that the decision be postponed.

I would like to remind the House that there are facts. For each 24 bottle case of beer produced in Canada by microbreweries, the federal government collects $4.09 when it is sold in a grocery store. When it is sold in a bar, however, the government collects $6.12. If it were sold in the United States, the tax would be $1.12 and $4.09. This is almost a plot designed to close down the microbreweries.

If this is what the federal government wants, it should say so and let us debate the issue. Why does it want the microbreweries to disappear? The government might think that the large companies like Labatt and Molson are part of the campaign for national unity, just like the Canadian dollar and the early railroads.

I can see no objective reason for not including the beer industry and the debate on the reduction of the excise tax for the microbreweries. There is none, except maybe for financial reasons that escape me.

[John Bryden, Liberal, Ancaster—Dundas—Flamborough—Aldershot, ON]

Mr. Speaker, we have heard a lot about the beer that is not in the bill. I would like to talk a little bit about the wine that is.

One of the purposes of second reading debate is to examine legislation in detail to try to find flaws or make observations about it and bring the contents of the bill before the House. I certainly acknowledge that there has been some very passionate feelings about microbreweries and the fact that beer is not included in the legislation. I wanted to tell the member opposite that there is no reference to beer, but it is true that beer was defined so it would appear that there was an intention at one time to include beer in the legislation. I will come back to that a little further along.

One of the things that really interests me about the bill and I should point out to Canadians at large is that while it does not deal with brewing our own beer, it certainly does deal with the growing industry in Canada involved in making our own wine. This is a phenomenon that got its start, at least in Ontario, in the mid-1980s, basically taking advantage of some loopholes in legislation that existed.

In my own community, several of these little shops developed, first I should say, to brew their own beer and then started developing make your own wine on the premises operations. This was an enormous opportunity for Canadians, at least in Ontario. I acknowledge that in Quebec, because of the French heritage of my Quebec colleagues, there is a far greater sensitivity to wine than there ever has been in English speaking Canada, at least up until the time bottle your own wine businesses developed in the 1980s and then spread. They started as make your own beer, but just looking at the small shop fronts in my own riding, beer is now taking second place to make your own wine.

These are wonderful opportunities because we can do it all on the premises. We can get various grape concentrates from some of the famous vineyards in France. We can also get them from Canada. We can make a Merlot, Chablis, or a Bordeaux and many other types of wine. It is interesting because this started out almost as a cottage industry. As I say, it piggybacked on the brew your own beer.

I was looking at some Statistics Canada figures. It is very difficult to find out because I tried very hard all day to get some idea of how large a sector of the market make your own wine is and I was unable to do so. But looking at some Statistics Canada figures from 1980, it is very, very interesting because starting in 1970 we see an overall decline in spirits consumption. That is all kinds of other alcohol. We see a sort of dip and then a rise in beer and then a flattening out. Parallel to that flattening out is a sudden sharp rise in wine consumption and wine sales.

I would suggest that what is happening there, again possibly mostly in English speaking Canada, is the result of so many Canadians being able to go to a little shop in their community and instead of making beer, they make their own wine. They make it for about a third of the price of a brand wine. Actually, a lot less than that sometimes. It has introduced them to the entire experience of wine drinking.

I would suggest that after a certain length of time making our own wine at these shops we begin to develop a taste for better wine, because the reality is that in these places where we bottle our own wine and ferment our own product, it really does come out as different grades of plonk. After a little while, those of us who struggle along and can finally afford a good bottle really appreciate it. I would suspect that the increase in popularity of make your own wine stores has had a very good effect on all kinds of wine sales in Canada.

That brings me to Bill C-47 because it regularizes the actual production of wine in these establishments. As I was saying earlier, a lot of this was done basically as a result of loopholes in legislation, and mostly provincial legislation. Here we have the government, at long last in my view, attempting to formally regulate the make your own wine establishments and set some rules.

I draw attention to some of the clauses. In section 62, and there are a number of subsections, the bill would make it legal to produce wine and package it for one's own personal use. There are various other aspects of it. It also covers the possession of wine. One has to possess wine for one's own use.

It sets rules for the establishments themselves. If they are holding wine in bulk then they would not be breaking the law. Up until this legislation, or at this moment I would suggest, it is an entirely grey area as to what is happening on those premises. The bill would attempt to give it some system or regulation. I think it will be a benefit to everyone.

However, there are clauses that are kind of interesting and need to be dealt with by the standing committee that will be looking at the legislation after it passes second reading. Clause 63, for example, states:

No person shall sell or put to a commercial use wine that was produced, or produced and packaged, by an individual for their personal use.

I can see a problem here because a lot of charities and non-profit organizations, and perish the thought, even political fundraisers, rely heavily on trying to bring in beverages that are cost effective, shall we say. This clause has to be looked at.

There is provincial legislation that already applies here with respect to spirits on premises for fundraising events but this particular section in Bill C-47 would appear to forbid a charity from using wine made at a make your own wine store as part of a fundraising effort. I would say that should be revisited because the reality of it is that commercial wine, the wine that comes under label for the most part, is much too expensive to be a beverage at a fundraiser. That indeed is one of the reasons that many fundraisers, if they are to have an alcoholic beverage at all, choose beer. I think we have to look at section 63.

There is a similar section, section 64, about the packaging of wine, that it has to be packaged only on their own behalf. That of course raises questions about packaging make your own wine as gifts. Again, I think we have to look at that.

Then there are some other peculiarities. I found one section that was quite amusing. It is wonderful to prowl through a bill, and I suggest to Canadians that they should get onto the Internet when they see bills like this appearing in parliament and do exactly as backbench MPs are supposed to do, and look through it and make their own inferences. There is quite an interesting section, section 2, on the definition of wine. I found that fascinating because we are talking about make your own wine.

In section 2 wine is defined, among other things, as a beverage of normal alcohol content but it is also defined as a beverage that is not fortified in excess of 22.9%. Well, Mr. Speaker, that is some wine.

What the bill basically does, and this might be something else the committee might look at or other people who have some strong thoughts about alcohol consumption in general, is it makes it permissible to make our own sherry and port. It is quite bold because it suggests that we can fortify it. Quite apart from all the sections about the regulating and the denaturing of alcohol, alcohol that is not denatured can obviously be applied in this bill to make our own sherry, which I find somewhat amusing. These are positive aspects of the bill.

I think we need to debate this because one nice thing about making our own wine is that it is very much an ordinary person thing. This is what Canadians have been doing. I think the rise of brew your own beer or make your own wine establishments has been a very positive thing.

In that context I would like to allude to the fact that the bill does not deal with the brew your own beer. I have great sympathy for the complaints from the opposition on this. I am a great fan of the microbreweries in Quebec. I have had the happy occasion to visit St-Jean-sur-Richelieu. There are about five microbreweries in that area and they are all excellent.

However I suspect that the government may have run into a problem that is quite different than the problem that is perceived by the opposition involving the major breweries. I think that problem may be the fact that, at least in Ontario, every brew your own beer franchise is a microbrewery. The difficulty is that in Ontario we can go to these establishments, get a recipe to make an English beer, a wheat beer or a German beer. We can duplicate just about every imaginable beer that can be bought under label from a store. I suspect that one of the problems is how to manage the difference between this type of microbrewery and the type of microbrewery that exists in Quebec.

I will say that I would absolutely support trying to find a way in which to ensure that the microbreweries, not just in Quebec but elsewhere, are retained. I would say in passing that it is not quite the same thing with wine because the beer produced in these brew your own stores is a very close imitation of the very best beer we can buy anywhere, including in the microbreweries, whereas at the make your own wine establishments the best wine we can make will never match a French, Canadian or Australian label.

However, the bill is not just about wine and spirits. I would like to also draw the attention of the House to the fact that the bill also deals with tobacco. I think that is very important because in the early part of the 1990s this country experienced a very severe problem with respect to tobacco smuggling. In my view, a lot of it was the government's fault in the sense that the federal government, the predecessor government to the Liberals if I may say so, elevated taxes on tobacco to such a level that contraband taken from across the border from the United States became very profitable.

I well remember in 1995, I had only been up here two years, that we had a crisis basically along the St. Lawrence Seaway where organized crime and other interests were importing not just hundreds of millions of dollars but a billion dollars worth of tobacco products from the United States. The statistics from that period are quite shocking. The government in the end had to lower taxes and, to a large degree, that addressed the problem.

What remained was the fact that a lot of the tobacco products that were being smuggled in from the United States during that particular period were actually made in Canada.

We had a situation where tobacco products, as it later emerged in investigations in the United States and in our own investigations here in Canada, that enterprises were producing tobacco in Canada and then shipping it to the United States both in an unfinished fashion and as cigarettes. These products were then being smuggled across the border back into Canada. It was a billion dollar industry and none of that money went to government. There were no taxes. It was a very severe problem.

One of the interesting statistics was that in 1993, just to give members an idea, 18 billion finished cigarettes were being exported from Canada to the United States. Whereas four years earlier it was only 4 billion cigarettes. In other words, the contraband market in Canadian cigarettes increased enormously.

What Bill C-47 does, and I think it is a very positive thing, is it introduces some severe penalties with respect to the illicit manufacture and distribution of tobacco products.

I draw the House's attention to clause 214 which provides that if somebody is convicted of manufacturing and selling cigarettes without government authorization, without going through the proper channels, which would include smuggling, the fines on conviction range from $50,000 to $1 million and imprisonment for a term of not more than five years. That is a heavy penalty and I think we all should be pleased to see it there. The one thing we do not want to do is go back to that period when tobacco smuggling was a major industry and, I regret to say, a major industry on our border Indian reserves. I think Canada came to a very near point of lawlessness along our borders as a result.

The key regulations that these penalties apply to are clauses 25, 26 and 29 which basically say that no person, other than a licensee, shall manufacture a tobacco product, and no person shall carry on the activity as a tobacco dealer without the appropriate licence, and so on. I suggest that this is a very positive step forward.

It is good technical legislation. I am very pleased to see that it has sort of addressed the problem of tobacco smuggling in a very substantive way. It has addressed the problem of the illegal manufacture of cigarettes. Cigarettes have been with us for a number of centuries and we are not going to stop people smoking. We might stop a lot of people smoking but it is an addictive product and a lot of people will continue to do so, just as they will continue to drink alcohol.

It is very important that we have the regulations and the legislation in place that administers these two product which do not always do the best for us but two products that people insist they will live with. If I may say so, I could certainly do without tobacco but I think wine and the microbreweries are certainly worth saving.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I listened carefully to my colleague's speech on Bill C-47. I thought he did a very good job. He should give courses to the secretary of state and the parliamentary secretaries, because they do not often read the bills. He even read part of the bill to us. That was most interesting.

I would simply like to clarify one point and then ask him a question. A distinction must be made between microbreweries and make your own breweries. What the member was talking about earlier were make your own breweries, which allow certain wines to be reproduced, just as some make your own wineries allow certain Beaujolais and so forth to be reproduced, but on a limited scale.

When we talk about microbreweries, we are talking about a production in the neighbourhood of 300,000 hectolitres a year. They are still sizable breweries. They are not brew your own establishments. They produce original beers in Quebec, Ontario and Alberta. Some of these original beers increase diversity in the market and create opportunities for segmentation, while meeting consumers' needs for diversification.

I am sure that the member also has a desire to help the industry, particularly the microbreweries. Since he seems very open-minded and favourable to the microbreweries, and since he recognizes the great diversity and product diversification, especially when it comes to wine, spirits and beer, is he prepared to support a proposal to reduce the excise tax for microbreweries, which is often six times higher than that imposed on American microbreweries?

In asking him this question, I would like to remind him that American microbreweries are making inroads on the Canadian market with this competitive tax advantage. The major problem facing Canadian microbrewers then becomes not being able to compete with this almost unfair competition from the American breweries.

I would also like to remind him, before he gives us his support for reducing the excise tax, that the major Canadian breweries, John Labatt and Molson, have distribution contracts with the American breweries.

It cannot be argued that John Labatt and Molson are defending Canadian microbrewers and, at the same time, taking advantage of the microbreweries' market by selling products from outside Canada. Would the member be prepared to restore justice for Canadian microbrewers?

[John Bryden, Liberal, Ancaster—Dundas—Flamborough—Aldershot, ON]

Mr. Speaker, the simple answer is yes. I think most of us would agree that we would want to support a small industry that has, shall we say, not wanting to be ironic, a Canadian flavour or a Quebec flavour depending on where one happens to be drinking the beer.

It is a quality of life issue. One of my great joys when I go on my French lessons at St-Jean-sur-Richelieu--

It is possible to choose among an assortment of microbrewery beers that one drinks in small glasses. It is an experience that I truly enjoyed. It is something that we must protect. So, yes, absolutely.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I was very pleased to hear the comments of my hon. colleague. He clearly has read the bill but I would like him to respond to something.

The Bloc members continue to make comments about Bill C-47 in that they want to see the reduction of excise duty on beer. The bill does not deal with the taxation of beer. In fact it does not deal with the substantive rate issues for any products.

The member across the aisle has made a lot of comments about beer. The member knows that first reading on the bill was in December 2001 so clearly there was no conflict of interest by the chair since she did not become chair until February.

I would ask the member to comment on the fact that the Department of Finance is currently reviewing the analysis with regard to proposals put forth by the beer industry and by the wine and cider industry as well, which I know is of interest to members across the aisle from Quebec. What does the member think of this approach in terms of looking at it specifically, since the government was faced with the situation where the industry asked that beer not be put into the bill so that we could analyze it separately, deal with the issue and then move forward?

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

John Labatt and Molson.

[Bryon Wilfert, Liberal, Oak Ridges, ON]

Will somebody lift the bridge, the foghorn is up again. He is not listening. Maybe he should listen to the fact and get it straight. There is no beer in the bill.

Could my colleague comment on the kind of approach the government is taking in terms of analyzing this separately? Why would that be important in terms of the other issues that are raised in the bill in terms of moving it forward?

[John Bryden, Liberal, Ancaster—Dundas—Flamborough—Aldershot, ON]

Mr. Speaker, I certainly recognized at the very beginning that beer was not in the bill and that is what I said. I also appreciate the disappointment on the part of my colleagues on the opposite side in this sense, and I agree.

As I mentioned in my remarks, there may be some special problems with respect to the micro-beer industry and the beer industry at large that require special attention by the government, and that may have led to the government not including it in the bill. It is certainly true that this bill is not about the excise tax on beer and I would support the reduction.

However what is important here is that the government move swiftly because, and I think all of us would agree, we have to protect these quality of life industries wherever we find them. If I heard correctly what has been said from the other side, the fear is that the microbrewery industry in Canada may be in jeopardy. We all know that there is a temptation by government, when it gets lobbied, to sit on things for maybe a year or two or three or four.

If the message coming from my colleagues on the opposite side is to move swiftly, then it is a good message.

[Robert Lanctôt, Bloc, Châteauguay, QC]

Mr. Speaker, I appreciate the comments made by the member. However, since he is interested in this issue, I would like to point out one fact to him.

Is he aware that 38 out of 86 microbreweries have had to shut down over the last five years? How many more will have to shut down if this taxation rate of 28 cents is not reduced, when we know that it is 9 cents a litre in the United States? It is a problem and it may even be urgent.

How do we know if these microbreweries are doing well or if they are in trouble? They will certainly not say publicly that they are in trouble. However, 38 microbreweries have had to shut down over the last five years.

Does the member think that this particular aspect of the situation requires urgent consideration?

[John Bryden, Liberal, Ancaster—Dundas—Flamborough—Aldershot, ON]

Mr. Speaker, again I think the problem is that this is not the bill that will deal with the problem. It is a tax problem. However this is a parliament that is dealing with the problem. We have heard some comments about parliament being dysfunctional and not working. I can suggest to all members that this is when parliament is working, when members bring forward an urgent issue.

I just regret that the issue got deflected on the chairman of the finance committee. I do not think that is where the issue really is. The issue is that there is a quality of life problem, a small business problem, and we all share the desire to help small business.

We have raised the issue and the message is clear for the government. Regardless of what happens to Bill C-47, the government needs to move very quickly on this issue. Maybe a private member's bill is the way to go if we can make it votable.

[The Deputy Speaker]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Acadie—Bathurst, Société Radio-Canada; the hon. member for South Shore, Fisheries and oceans; the hon. member for Saskatoon—Humboldt, Grants and contributions.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Mr. Speaker, I am pleased—

[The Deputy Speaker]

Order, please. I am sorry to interrupt the member, but I just want to check the order in which members are supposed to speak.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Mr. Speaker, I rise on a point of order. I have no problem with my colleague from the Canadian Alliance having the opportunity to speak even though his name was not on the list. It was probably his party's turn to speak. If this is the case, I have no problem with that.

[The Deputy Speaker]

This is very generous of the member, because that is exactly what is happening. Even though these lists are not regarded as official documents, based on the rotation between the parties in the House and since a member of the official opposition wishes to speak at this time, I am giving the floor to the member for Esquimalt—Juan de Fuca.

[Keith Martin, Canadian Alliance, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, I thank you and I thank my colleague from the Bloc Quebecois for his generosity.

It is a pleasure to speak to Bill C-47, an act respecting the taxation of spirits, wine and tobacco. I would like to draw the House's attention to a few bits of misinformation that we have heard in the House today from the government.

Back in 1994 the government was faced with a large problem of tobacco smuggling which was taking place primarily in Ontario and Quebec. At that time the government decided to lower the rate of taxation on cigarettes to address the smuggling issue. That created a huge problem.

Against the advice of the Department of Health and of stakeholders, the government lowered taxation rates which resulted in 225,000 Canadians taking up smoking, particularly teens in the young age group. We know that those people who take up cigarette smoking are primarily in their teenage years or even younger. It took the government some six years to change that mistake by bringing taxation rates up. Unfortunately every year 250,000 new Canadians took up smoking and this will have a devastating effect on all of us.

We know that the biggest thing we could do to decrease the chance of teenagers smoking is to keep the costs high. This is called price elasticity of demand. This means that as the price of cigarettes is increased, it creates a dramatic reduction in consumption, particularly among kids. This dramatic reduction is not only in the number of cigarettes they smoke, but also the age at which they start to smoke. In other words, the more costly it is, the older they are, the less they smoke. The cheaper it is, the younger they are, the more they smoke. Reducing the tax is probably the single most destructive act in public health care policy that we have seen in more than 30 years. We will pay the price in the future.

I compliment the government for increasing the tax rates and harmonizing them across the country. This will do much to decrease cigarette smuggling between the United States and Canada. Cigarettes were going from Canada to the United States and then resold back in Canada. People could make a profit because the price difference between the two countries was so dramatic.

This issue does not address the much larger issue of smuggling in general. Tobacco was just one of the products being sold at that time. We know that smuggling rings were organized crime rings working between the United States and Canada. Yes, they were buying and selling cigarettes but they were also buying and selling weapons, alcohol and drugs and involved in human smuggling.

A massive amount of smuggling is going on north and south, right under the noses of police who have been told not to interfere, in part because a lot of this takes place on aboriginal reserves crossing the boundaries of both countries. It is a serious jurisdictional problem. Many law-abiding aboriginal people living on these reserves are seriously harmed by this situation. The police are unable to intervene because they are understandably scared of an Oka-like crisis.

I ask the government to look at the larger issue of smuggling taking place in these areas. The government has control over the smuggling of tobacco, and it should be complimented for that. It is a good move on the part of the government, not only from a judicial perspective but also from a public health care perspective. For heaven's sake, the government must look at the larger issue of the smuggling of guns, drugs, alcohol and people.

The way to deal with that is not only to enforce the law, but to also implement what are called Rico-like amendments. The United States Rico amendments refer to racketeering, influence, corruption, organization charges. These laws enable law enforcement officers to go after organized crime gangs in a way they have not been able to before.

Good things happen when we can go after the financial struts and pillars that help support organized crime gangs. If the government wants to do one that is very effective, it should implement Rico-like amendments similar to those in the United States and at the same time ask other countries to implement them as well.

If we could do that on a transnational basis, then organized crime gangs would have a very difficult time doing their work that parasitizes so many in our country.

The second issue is alcohol. My province of British Columbia, as in many other provinces, has a large number of microbreweries and vintners, winemakers. Their biggest problem is the barriers that exist is exporting those wines east-west. It should be noted that the barriers east-west are greater than those north-south.

Vintners in my province can sell fairly easily to people in the United States. However it is very difficult for those individuals living in Ontario, Manitoba or Nova Scotia to buy British Columbian wines. A hodgepodge of rules, regulations and obstructions exist for the export of that wine east-west.

I would encourage the government to do something for a product that, in moderation, is good for the health of people, and that is the drinking of red wine and other wines. It would do wonders for the health of Canadians and also for those vintners who produce some of the finest wines in the world.

I would encourage the government to work and listen to the vintners and to remove those east-west barriers to trade. Canadians would then be able to purchase Canadian wines no matter where they lived. This would do much to support these products which are really a Canadian success story. I also suggest removing and lowering the tax rates not only for vintners, but for small businesses as well. My party has pushed for that for a long time.

My colleague from the Liberals mentioned that they wanted to do something for small businesses. If they truly want to do something, then they can lower the tax rates and remove the egregious rules and regulations that choke off the ability of small business to compete. They can also remove the export tax restrictions so they can compete fairly with other countries.

The other thing the government should do is flatten out the tax system and remove the corporate and personal tax structures.

My colleague across the way suggested that we pursue this through private members' business. As we know, 239 private members' bills have been put forth by members from all parties. Absolutely none of them reached committee stage. None from the government ranks have been made votable, which is terrible.

We need to do many things. If the hon. member from the other side truly thinks we should use private members' business to implement some of the fine solutions that have been put forth in the House, then we need to reform private members' business so that every member in the House, regardless of what party they represent, will have one votable private member's bill per parliament and one votable private member's motion.

If we could do that, and we can, then members of the House could have constructive discourse over important issues to Canadians and to our country. There are so few avenues where we can do that. We cannot do that by and large in the House or committees because these venues are primarily talk shops for areas of intellectual interest. They have no real effect on public policy.

I think all members know that there will be a round table on private members' business this week. Members from across party lines will come to it with good ideas. Collectively we can force the government to adopt those good suggestions. By doing that, private members' business would work for the betterment of everybody and ideas such as the ones put forth on this issue today could be employed. This affects all of us.

In closing, we support the bill. I compliment the government for equalizing taxation on tobacco across the country and for raising the tax levels which will do much to decrease smoking, particularly among children.

I would encourage the government not to back down when it hears pleas from the tobacco companies asking for lower taxes. Whatever the government does, it should not lower taxes on cigarettes. If it does, more children will pick up cigarette smoking at a younger age. It would be a devastating public health policy.

[Robert Lanctôt, Bloc, Châteauguay, QC]

Mr. Speaker, I have a question for my colleague. We know what is included in the bill, and we know what happened in committee when the chair rejected the amendments. We know the entire story.

The examination of the bill has been rushed, and beer, which is an important element, has been left out. The bill is amending the Excise Act and the Excise Tax Act, and it does it comprehensively. In light of what happened, it seems that something important has been left out, namely beer.

Here is my question. Given what happened in this very important committee and knowing all the facts, how is it that the official opposition supports this bill? How can you support this bill knowing that something important is missing and that there was a total lack of diplomacy? The chair of the Standing Committee on Finance has rejected amendments that should have been included because this is a bill that should deal comprehensively with everything in the Excise Act and the Excise Tax Act.

[Keith Martin, Canadian Alliance, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, I thank my colleague from the Bloc Quebecois for his question.

My party has put public health as the number one priority. I think our critic would certainly be open to the suggestion of bringing beer into this. I am not certain as to the reasons that beer was excluded but we are supporting the bill because we feel that of all the public health care issues that exist today, cigarette smoking is public health care problem number one. It is a preventable problem. Our combined efforts are needed to address it. Children truly become addicted to nicotine very early on. The bill, by raising the taxes and harmonizing it, will go a long way to affecting the most vulnerable people in our society. That is the reason we want to do this.

If my hon. colleague wants to add beer to the bill, then we would need to bring it back to the House. We would need to work with the government to show the flaws in the bill and work with other political parties to ensure that beer is included in a reasonable fashion.

[Peter Stoffer, NDP, Sackville—Musquodoboit Valley—Eastern Shore, NS]

Mr. Speaker, I would like to ask my hon. colleague from the west coast to stretch the argument a bit. He mentioned tobacco smoking and the ill effects it has on children.

In Nova Scotia the provincial government recently put in what it would call a tough anti-smoking law. The reality is it is not that tough at all. Smoking is still allowed in many public places.

The hon. member is a medical professional. Would he agree with what I have been trying to say back home, that smoking should be banned, period, in all public gathering places to prevent secondhand smoke and also to deter people from smoking in the presence of other people?

[Keith Martin, Canadian Alliance, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, my hon. colleague is aware that what he refers to is really a provincial issue.

The issue of secondhand smoke is a devastating one. In my early 20s I did a study for the Ontario government on the issue of secondhand smoke. It was found that there were demonstrably higher levels of morbidity and mortality associated with the spouses of people who smoked. It was quite dramatic actually. Not only were disease rates much higher but also death rates were much higher for people who lived in smoking environments.

I would like to take a moment to make a plea to the public. As a doctor I find it to be absolutely unforgivable when parents smoke in the presence of their children. Some parents smoke in closed cars with their children. Children who are only a couple of years old are brought to the emergency department and their charts are filled with admissions for respiratory problems, asthma and pneumonia. That is a direct result of parents smoking around their children.

Mr. Speaker, through you to the public, I make a plea to anyone who is watching to not smoke around their children, to not smoke in their homes if they have children and for heaven's sake, to not smoke in their cars if children are present. Smoke outside the house. Do not smoke around children. Do not poison the lungs of children. That is exactly what some people are doing.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Mr. Speaker, I realize that the member's speech did not focus on the issue of beer.

Still, I would like to ask him a question that seems relevant to me. The Bloc Quebecois talks a lot about the microbreweries, because they have a major impact in Quebec. However, there are many microbreweries all over Canada that are going through the same unacceptable situation.

Since we are reviewing the Excise Act and the Excise Tax Act, would it not be appropriate to correct an injustice where, in several rural communities, the rug is being pulled out from under smaller businesses that could otherwise be creating jobs? In fact, would this not be a great opportunity to act and ask the government to bring forward an amendment that would right this wrong?

The excise tax issue will not be back before the House for quite a while. We know that time is not on the side of the microbreweries, but rather on the side of larger breweries, which benefit from the fact that American microbreweries have access to the Canadian market and can sell their products here.

Would this not be the right time for the government to go into committee of the whole in order to quickly resolve this issue and ensure that the tax that applies to Canadian microbreweries helps them compete against American and European microbreweries?

[Keith Martin, Canadian Alliance, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, I thank my colleague who was very generous to give up his time so I could speak.

My friend from the Bloc Quebecois is absolutely right. This is the time for us to do that. I would encourage the minister to meet with his counterparts across party lines to implement a tax structure that would enable our microbreweries to be competitive.

We know that wherever they are microbreweries are a Canadian success story. They have been able to compete not only within Canada, but across borders. They provide an excellent product. The United States, with a population of over 300 million, is a huge market. Our microbreweries can and should be allowed to go into that country. The worst thing would be to have an environment where the government puts obstacles in the way so that the microbreweries cannot compete.

I encourage the government to work with members on this side to implement a tax structure that will enable the microbreweries to be competitive. The longer the minister waits, the worse it is going to be. Microbreweries could be put out of business at the very worst, but at the least it could make them not as competitive as they ought to be, thereby limiting the number of people who could work in the industry.

[Robert Lanctôt, Bloc, Châteauguay, QC]

Mr. Speaker, for the benefit of the Canadian Alliance member, I would like to ask him if he is aware of the fact that in five years, 38 out of 89 microbreweries have closed?

I would like to provide him with some figures. I remind him that in the United States, the tax is only 9 cents per litre of beer. Here, the tax is 28 cents per litre. The problem is as follows: foreign microbreweries even enter into Canada and are distributed by the large breweries, such as Labatt and Molson. This becomes unfair competition for our microbreweries.

The problem is not one that needs to be discussed. We have been negotiating since 1997 and we are fully apprised of the situation. We have lost 38 microbreweries out of 89. There are only 51 remaining. It is time to do something. It is time to accept an immediate amendment, to include beer and solve the problem of microbreweries immediately, rather than rushing this through.

As my colleague, the member for Kamouraska--Rivière-du-Loup--Témiscouata--Les Basques said, the problem is the following: we cannot wait. When will we be able to come back on this and solve the problem in the beer sector? We know that 38 microbreweries have already closed in the last five years. This is an urgent problem that needs to be solved.

[Keith Martin, Canadian Alliance, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, I thank the hon. member for the facts and figures. He articulated the problem very well. It is almost akin to the softwood lumber tariffs that are affecting this country so disastrously.

What is the outcome of putting 38 firms out of business? It is to put many people out of work. What is the impact on the revenues to the government? It is to lessen them.

The intelligent thing to do would be to enable the microbreweries to function properly. The government should not have a tax system worth 9¢ a litre in the U.S. and 28¢ a litre in Canada. Parity would be smarter. If the government believes it would have less revenues, that is actually incorrect. Instead of the microbreweries closing down, they would stay open. Thirty-eight microbreweries would be open. Thirty-eight microbreweries would be hiring people. Thirty-eight firms would have people who were working and paying taxes as opposed to collecting employment insurance.

That is not only smart for Canada, it is smart economics. The government ought to have some level of parity with the U.S. in the tax structure. By doing that we are confident our microbreweries could compete and win on a North American scale. We owe it to them morally to give them a level playing field so they can do the fine work that they do, hire Canadians and generate tax revenue for the government.

Some years ago when Brian Mulroney was prime minister he briefly lowered the tax structure. Revenues to the government went up because the private sector could expand. More people were hired. More individuals were working and paying taxes and fewer people were acquiring funds from the public coffers through EI.

The smart thing to do is to lower taxes. It produces higher employment and lessens the demand on employment insurance and welfare. It is good for the public coffers and it is good for Canadians.

[Tony Valeri, Liberal, Stoney Creek, ON]

Mr. Speaker, I appreciate the opportunity to say a few words this afternoon on this excise tax act in front of us, Bill C-47. Sitting in the House and listening to the debate, I have heard a fair bit of discussion about microbreweries, about the competitiveness of microbreweries with respect to our U.S. counterparts, and also about the need for amendment in this piece of legislation so that we can address our concerns for and with the microbreweries. It should be pointed out that Bill C-47 is not an appropriate vehicle for implementing these types of reductions in the excise duty on beer. The bill does not deal with any of the taxation issues for beer.

That being said, though, I think it is fair for members in the House to have this discussion and put forward their perspectives with respect to microbreweries. It is fair to state, and I think it is a statement that all members of parliament would make, that in no way should we as a government or as opposition members or as members of parliament be putting forward taxation policies to try to prevent the growth of industry or industry sectors or of small business. Certainly the objective of being in parliament is to try to assist, to ensure that small businesses continue to prosper, to ensure that in fact those small businesses become larger businesses and that we are able to attract multinationals to this country so we can provide opportunities for young Canadians to stay and continue to contribute.

I wanted to make that point at the outset because I know that the discussion this afternoon really focused on the issue of microbreweries. I personally do not have a problem with what is being said with respect to microbreweries, but I think the emphasis is misplaced. It certainly should not be an emphasis of Bill C-47.

As I am sure members of parliament are aware, and I know that the Parliamentary Secretary to the Minister of Finance mentioned this last Friday, I think it was, when this debate began, it should also be known that Department of Finance officials are in fact reviewing proposals put forward by the beer industry to address concerns. It is not that this issue is not being given any weight. It is not that the government is not aware that there are some issues that need to be addressed with respect to this sector. It is just that Bill C-47 is not the vehicle whereby we can put forward an amendment and deal with it, since it really is a work in progress. There is obviously a commitment that once the analysis and the consultation are completed we can decide whether excise duty and excise tax reductions are warranted.

However, I think the case needs to be made. I am sure that on both sides of the House we will find both support and, I dare say, some opposition to what is being asked for. That is the purpose of having debate. That is the purpose of conducting these consultations. It is the purpose of completing an analysis.

I would suggest to my hon. colleagues across the way that there is an openness on behalf of the government to deal with this issue, but the analysis and the consultations need to be completed. Then we can certainly have that debate, which I would certainly welcome. I look forward to hearing from my colleagues from the Bloc as they put forward their perspective on this. It is one that we need to certainly take note of as this debate continues. Members from both sides of this House certainly have something to say on this issue.

It is also important to note that Bill C-47 is a direct result of a discussion paper on the Excise Act review, which the Department of Finance and CCRA released back in 1997. In coming from 1997 to where we are today, obviously numerous discussions took place with various sectors that were to be affected. It is also important to mention that the beer industry indicated to the government, as I have been told, to continue with Bill C-47 and set aside its own industry perspective for the moment with assurances that we would be dealing with issues pertinent to the beer industry. Therefore the bill went forward and in fact the report has been provided to the finance department and that consultation and analysis are now being completed. That is my understanding.

Hon. members across the way are calling for an amendment because we need to deal with this right away. I do believe that there is an urgency to this matter, but I think it is unfair to say that the matter is not being considered or not being dealt with through the proper channels. Whether or not it is moving fast enough is always an issue for debate and is probably an issue that we will not resolve here today.

With respect to the beer sector, I think it is important to ensure that those points are made. The concerns of the brewers really centre on issues relating to point of imposition, warehousing, licensing requirements, loss allowances and controls on beer exports. These are complicated issues and before any progress in discussions between the government and the brewing industry can be achieved, I think it is fair to say that we need to do the analysis and that further work is required to assess the impact of these proposals. This type of work would not be readily completed within the timeframe originally contemplated by the Excise Act review. I wanted to make those points because we did hear quite often during the debate about the issue surrounding the brewers' association or the brewers themselves.

In recent years, it became quite obvious to both industry and government that the Excise Act, the excise framework, needed to be modernized. That is why the consultations began back in 1997. Industry certainly has introduced new technology, product marketing, and various distribution initiatives that the existing Excise Act was not equipped to accommodate. This is probably an example of where the government machinery was once again trying to catch up to the innovations in the private sector. It is fair to say, as my hon. colleague from across the way said earlier, that there are good aspects to the bill and there are reasons to support this type of legislation.

It is also important when we talk about the competitiveness of sectors and companies to pay attention to the compliance costs associated with that industry. It is certainly fair to say that pervasive controls in the act impose high compliance costs on the industry and impair the competitiveness of Canadian producers. That is the broader issue of dealing with the command and control structures of regulation versus the best practices approach to regulation. The act moves toward improving the issue of competitiveness of Canadian producers.

Given the increase in foreign competition in Canadian markets for beverage and non-beverage alcohol, the government, through consultation, found that the problem needed to be addressed. As I said earlier, Bill C-47 is a result of the discussion paper on the Excise Act review which was released back in 1997. It was in fact out of that review that we found three guiding principles, three goals that essentially guided the configuration of this piece of legislation.

The modern legislative and administrative framework introduced in the bill will generate stable and secure revenues needed to address the contraband pressures that are certainly out there. It was found that this can be achieved without imposing unrealistic or unnecessary costs and administrative burdens on industry. That needs to be the objective of any piece of legislation that comes forward in the House. We must always consider the costs associated with implementing legislation and try to balance the benefits of legislation with costs associated with it when it comes to issues like excise tax.

This piece of legislation certainly seems to strike that type of balance, whereby we do not in fact impose unrealistic and unnecessary costs or administrative burdens. It also helps to address the ongoing concern over the smuggling and illegal production of alcohol. The intent is to certainly ensure that the spirits industry, to name one, is no longer hindered by outdated or onerous controls over premises and equipment and that with these controls removed businesses will have the greater flexibility they require to organize their commercial affairs to respond more quickly to market changes. We all know that in an increasingly globalized economy those pressures to change certainly come faster, companies themselves must have flexibility and government should not encumber that type of flexibility through regulatory burden.

If I can just speak for one moment with respect to distillers, there is certainly an issue that I want to get on record. I want to take the opportunity to thank the Parliamentary Secretary to the Minister of Finance who helped resolve this issue with respect to the concerns of distillers. Now I urge the government to follow through on the commitment and proceed as agreed so that we do not in any way encumber this sector through regulation.

My hon. colleagues have talked about small business and the importance of supporting small business. With respect to vintners, it is also important to mention that the bill does in fact deal with the fact that all vintners must be licensed. It also stipulates that those with sales under $50,000 in the previous 12 months do and will continue to qualify for the small manufacturer's tax exemption. Therefore, for a very small vintner's operation the bill does in fact maintain that exemption.

The bill is really an administrative bill. I think it is important to emphasize that. It is not a bill dealing with tax measures. It is important to mention that the bill does introduce modern collection tools to help address the government's ongoing concerns regarding a number of issues, certainly one of them being the smuggling of alcohol. It certainly enables CCRA to improve its level of service to clients and its overall administration of the excise framework for both alcohol and tobacco.

To go back to that whole debate about regulatory burden, I certainly believe that in today's era of innovation and an innovation agenda, it is incumbent on the government to ensure that the regulatory burden, the making of regulations, is an important part of that innovation agenda. We really need to be able to create a framework whereby our companies are able to innovate, not to be regulated from a command and control perspective but rather one whereby they are able to innovate from a best practices or an evidence based approach to meet standards and requirements that we as a country and certainly as a government would have.

Bill C-47 would move toward reducing the regulatory burden and compliance costs. It is important to mention that. It is also important to mention that under the bill CCRA would improve its overall administration and level of service to its clients.

To sum up, the new excise framework would ensure excise duties on alcohol and tobacco were collected in a more effective and efficient manner, something we always strive for. It would provide for an array of modern administrative and enforcement tools which are important to ensure compliance with the new act.

The new framework for the taxation of spirits, wine and tobacco products would provide greater flexibility for businesses to respond to the challenge of organizing their commercial affairs. This goes back to the pressures companies feel in promoting and creating new markets and the pressures they feel due to globalization and the competitive nature of the industry.

Bill C-47 would provide for enhanced protection of excise revenues. It would provide for improved administration and lower compliance costs. Again, this goes back to the whole regulatory issue. The bill would provide for a more simple and certain taxation structure, something we should all be striving for not only in excise taxes but in personal and corporate tax. I am sure that going forward there will be many an opportunity to debate the issue with members of the House.

I have addressed a number of issues I wanted to put on record with respect to the administrative nature of the legislation. I made the point about brewers because the issue is important. I do not for one moment want to leave Canadians with the impression that brewers would not be dealt with or considered in the larger context of their issues. From 1997 to today there has been an engagement with the brewers who felt their issues could not be dealt with in the timeframe that was set out.

A proposal has been put forward with respect to the sector. The finance department is looking at the issues outlined in the proposal and will provide the analysis. We can then have a debate and discussion about how we might best deal with the issues put forward by the brewers.