Madam Speaker, I rise to speak on Bill C-47 with some degree of regret and bitterness.
Why so? Because the bill deals with excise tax, which by its very definition, gives the full significance of beer, what a beer is, what a brewery is, what a microbrewery is. Whether unwittingly or otherwise, the people over there have neglected to legislate on beer. This is a major omission, particularly where the microbreweries are concerned, when these are virtually all in the process of having to shut down.
I would like to draw my colleagues' attention to a very important point, the taxation of the small breweries, the tiny ones, commonly called microbreweries. When the representatives of the Brewers Association of Canada came before the Standing Committee on Finance last October, they told us about the difficult situation the microbrewery sector is currently going through. They presented solid arguments for the reduction of excise tax for the microbreweries.
In the context of globalization, these small companies have to compete with foreign companies that are less heavily taxed than in Canada. In a market that is becoming increasingly open, the competition does not necessarily come from within the country, but rather from other countries. The foreign competition often benefits from beneficial tax treatment, which allows them to provide a product at a price that is more than competitive. The Canadian parliament must not ignore this situation when passing legislation.
At present, Madam Speaker, France, Germany, Belgium and, most particularly, our U.S. neighbour to the south charge their microbreweries less excise tax. Canada is the only industrialized country that has refused to grant its microbreweries this privilege, or equity, or parity, as far as excise taxes go.
Take, for example, the case of a microbrewery from my region, Les Brasseurs du Nord, which brews the wonderful Boréale, naturally, and its competitor in the United States. Here a brewery producing 6.5 million litres pays a federal excise tax of 28 cents per litre, which comes to $1.8 million.
In the United States, in Boston—and speaking of Boston, I would like to take a moment to congratulate our glorious Canadiens for their win against Boston—the same business would pay $585,000, or 9 cents a litre. The figures speak for themselves. For the same production, there is a $1.2 million difference in taxes.
This is why the Brewers Association of Canada is calling upon the Government of Canada to reduce the excise tax by 60% on the first 75,000 hectolitres produced by Canadian breweries that produce a maximum of 300,000 hectolitres annually. This proposal has received support from the four largest Canadian breweries belonging to the association.
It should be noted that between them, the 53 breweries that pay excise taxes shell out $19 million a year. A 1995 study of Ontario breweries showed that the excise tax is nine times greater than profits in the sector, which are estimated to be $2.1 million.
Microbreweries can be found in just about every region. They are small businesses set up in small communities, which contribute a great deal to their development. They are tourist attractions, which generates employment, and consequently, more financial resources. Unfortunately, this unfair and untenable situation that the industry is up against constitutes a very real threat.
Only three months ago, there were 19 craft style breweries in Quebec. Now there are six, including one in my riding, Broue-Monde in Saint-Eustache, which has disappeared.
The situation demands to be rectified. The government must now make decisions that will help these small entrepreneurs. The question is: given the current state of affairs, why should microbrewers continue to invest in Canada, when there are incredible benefits to setting up shop in the United States? The excise tax represents a very heavy burden for these small Canadian businesses. It is therefore urgent that the excise tax program be amended.
In other sectors of activity, small businesses investing $1 million in land, equipment and facilities are successful. They hire fifteen or so people and have sales of $1.5 million to $2 million. They make a profit and shareholders take a profit. They are successful.
However, for microbreweries, it is a completely different scenario. With sales of $1.5 million to $2 million, they barely break even; no clear profit, but a requirement to pay a little over $200,000 in excise taxes to the federal government. The excise taxes are unrelenting. Let us be clear: in the case of microbreweries, excise taxes are higher than labour costs.
The government must recognize that small breweries are distinct and should be taxed accordingly. Unfortunately, it is the only party that still does not recognize this.
The amendment being requested is minimal compared to the revenues generated by the general tax. The proposed tax break would represent only 2% of what the government collects in excise taxes. Let us be clear that this concerns a small sector which is highly labour-intensive, manufacturing-intensive, requiring major investment, a sector that plays a vital role in small communities in their provinces.
The current taxation system will have to undergo a comprehensive review, something which has not been done since 1964, with the Carter commission.