Mr. Speaker, I thank my hon. colleague for practically turning the floor over to me in this debate. It is with great pleasure that I speak to, among other topics, the amendment put forward by the member for Drummond concerning Bill C-47, which reads as follows:
That the motion be amended by deleting all the words after the word “That” and substituting the following:
“Bill C-47, An Act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores, be not now read a third time but that it be read a third time this day six months hence.”
The reason I am speaking to the bill today is that, in my opinion, it is seriously detrimental to businesses in Quebec, which have always done very well economically and which offer Quebecers a product which meets their expectations and which, to a certain degree, deserves the full attention of this government, with a view to providing the necessary tax incentives to enable Canada's and Quebec's microbreweries to continue to market their products.
Generally speaking, Bill C-47 amends and, of course, introduces a number of technical improvements to the Excise Act. Here is a sampling:
the continued imposition of a production levy on spirits, tobacco products and raw leaf tobacco and the replacement of the existing excise levy on sales of wine with a production levy at an equivalent rate;
the replacement of the excise duty and excise tax on tobacco products other than cigars with a single excise duty;
more comprehensive licensing requirements and new registration requirements for persons carrying on activities in relation to goods subject to duty;
explicit recognition of limited exemptions for certain goods produced by individuals for their personal use;
tight new controls on the possession and distribution of goods on which duty has not been paid;
updated administrative provisions, including new remittance, assessment and appeal provisions that are similar to those under the Goods and Services Tax/Harmonized Sales Tax legislation;
updated enforcement provisions, including new offence, penalty and collection provisions;
Basically, we find it regrettable that the bill contains no provisions to reduce the excise tax on beer and microbreweries. We thought that the bill should naturally include beer and reflect the situation in which the microbrewers of Quebec and Canada find themselves.
I would remind the House that a number of Quebec and Canadian microbreweries are in dire straits. I would also remind the House that several of them have gone bankrupt and have had to close down because in Canada there is a preferential tax rate, clearly enshrined in the legislation, favouring the big breweries. Finally, I will remind the House that 38 out of the 86 microbreweries in Canada have had to close down. These small businesses do not represent a significant part of the Canadian beer market--only 4% to 5%--while the big breweries account for 90% of the market.
It is a growing industry. These dynamic small businesses are offering a product that meets consumers' expectations. It also meets the expectations of people in the regions.
Such a small sector as that of the microbreweries, which accounts for only 4% of the market and is steadily growing, should not be faced with tax measures or a tax system that puts them at disadvantage compared to the big breweries, which already have a huge share of the market.
I say it quite frankly because when we look at the situation in the United States, we realize that the American tax system is quite different from to the one we have here in Canada. For instance, 28 cents a litre is levied on Canadian products while only 9 ¢ a litre is levied on microbrewery products in the United States. Thus, in the United States, the government is collecting 9 cents a litre for beer produced by a microbrewery as compared to 28 cents a litre in Canada on beer produced here.
There is also the whole issue of the definition of microbreweries. In the United States, a microbrewery is a brewery producing less than 1 million hectolitres per year. In Canada, a microbrewery is defined as a brewery producing 300,000 hectolitres of beer. Therefore, in the United States a brewery producing less than 1 million hectolitres is by definition a microbrewery and, as such, is entitled to a more preferential tax rate, 9 cents, whereas in Canada, the threshold and the definition are, to a certain extent, a disadvantage for microbreweries.
Let me give the House a very real example: for every 24 bottle case of microbrewery beer produced in Canada, the federal government gets $4.09 when this beer is sold at a grocery store and $6.12 when it is sold in a bar. In the U.S., the tax on 24 bottles of microbrewery beer produced in the States is $1.12.
What does this all mean? It gives a clear competitive and tax advantage to microbrewery beer produced in the U.S. and sold in Canada, which, in turn, has led to the demise these last few years of a number of microbreweries; 38 out of 86 microbreweries had to close their doors, including seven in British Columbia. That expertise was developed not only in Quebec, but also in British Columbia. Thirteen microbreweries went out of business in Ontario, 11 in Quebec. In regions like Saint-Hyacinthe, Amos, Saint-Eustache, Baie-Saint-Paul, Montreal and Cap-Chat, small local businesses had to close down. Microbrewers themselves blame the tax system for placing them at a severe competitive disadvantage compared to the major brewers.
If the government opposite wants to make regional development one of its priorities, it should realize that its current tax policies have hurt smaller businesses that only have a 4% share of the market. Since the government keeps picking on small businesses, it is not surprising that jobs are being lost and that some of the businesses that had become a symbol for a whole region are no longer able to provide Quebecers and Canadians with top quality beer and even cottage brewery beer.