I am told that it is the current Minister of Justice. So, they supported microbreweries and they generated hope by saying “Indeed, it does not make sense. You cannot be competitive under such circumstances, considering the excise tax rate imposed on you. Therefore, we promise you that we will update the legislation. You will get what you want”.
Microbreweries are currently experiencing serious problems. They are paying more excise tax than they make profits. They were given reasons to hope. This act comes from the Standing Committee on Finance. It comes from the Department of Finance and it is the Minister of Finance himself, who is currently engaged in the leadership race, who promised to change things, to modernize the act, but instead he is crushing microbreweries with this legislation.
Beer has been deliberately excluded from the bill. The law has not been modernized. Promises have not been kept. Clause 2, line 14 on page 2 of the bill—the interpretation of the Excise Tax Act—provides the following, “'beer' means beer or malt liquor as defined in section 4 of the Excise Act.” They hushed this up thinking that we would let it go.
Resorting to such tactics is an insult to our intelligence and an insult to small brewers who have put their skill, energy, and hard work into building up their businesses. They want to compete on the market. Here is the answer we received in committee, “Wait. Other measures are in the works”.
These promises were made in 1997. We were told, “We will see about this in five years. We must wait another five years, because the act will not be reviewed until then”. This means that in the next five years, if the act is not amended or if no other measures are taken rapidly, there will not be many microbreweries left in Quebec and in Canada.
I cannot understand why my colleagues, whether they are from Ontario or Alberta, or whether they represent constituents who, through their entrepreneurship, have built up their microbreweries in order to sell their products, quality products, would not rise in the House. These members, who were elected to represent the interests of their fellow citizens, remain seated and hang their heads at such terrible legislation for microbreweries. This is a disgrace and I am ashamed for them.
The Canadian government talks a lot about how our businesses must be competitive. We agree. There is much talk about globalization. The government uses the taxes it collects from Quebecers and Canadians to set up programs to support businesses in Quebec and in Canada. That is the right thing to do. That is what our tax money should be used for. But the thing with the microbreweries is that they are not being allowed to compete. They are being squeezed out. Right now, our taxes are being used to support the big breweries.
How is that? Because in Canada, the tax on all beer producers, large and small, is 28 ¢ a litre. In the United States and in Europe, microbreweries pay only nine cents a litre. In Canada, both large and small companies pay 28 ¢ a litre. Large companies agree with paying 28 ¢ a litre. They were also in agreement with the government lowering the excise tax for microbreweries to the same rate as in the United States and Europe so that they could be competitive.
American owners of microbreweries producing so-called regional beer who want to import their products into Canada pay only nine cents a litre. How can our breweries compete on the U.S. market when they are paying 28 cents a litre? There is a huge difference. Either the microbreweries literally get swallowed up by outside markets, such as the United States and Europe, or we allow them to try to compete elsewhere. Everyone also knows that the methods we are using here are just as good as, if not better than those being used elsewhere. Our beer market is recognized world wide. Why not allow the microbreweries access to the international market?
The truth is out. We have here a letter the chair of the Standing Committee of Finance received from the president and CEO of the Brewers Association of Canada. I find it hard to understand that it was only after we put forward our amendments in committee that we found out that the chair of the Standing Committee of Finance, for whom I have a great deal of respect, was the wife of Mr. Barnes, the very one who deals with tax issues and one of the shareholders in John Labatt Ltd., a major brewery.
It seems to me that something here is not entirely transparent. Could there be the appearance of a conflict of interests. Ethically, someone who chairs a committee should act like a judge and remain neutral.
Such a person should not take sides but make decisions based on the rules and authority given to the committee by parliament. We have here a situation where our judgment can be skewed, as an opposition party has moved amendments that would include the beer industry in Bill C-47, a situation that makes no sense, according to some legislators. When we modernize an act, we have to modernize it completely. Why deliberately exclude beer?
This was done deliberately. The committee chair received a letter from the Brewers Association of Canada, which states:
—we fully support a reduction in the excise tax for small brewers... we strongly support a reduction of the excise tax for small breweries... We will support any measure aimed at attaining this objective, but in light of our prior agreement with the government—
I am thinking of Quebecers and Canadians who are listening today. When we hear “we fully support a reduction in the excise tax for small brewers, but in light of our prior agreement with the government”, could this actually mean that a very powerful lobby is saying to legislators “We do not willingly accept a reduction of the excise tax on beer because each time we gain a 1% share of the market, it is $17 million more in our pockets”? This is why beer and microbreweries are excluded from the bill.
At this point, I wish to show what is actually happening in the microbreweries sector. The big brewers like John Labatt and Molson currently control 90% of the market. As I pointed out earlier, each time the big brewers get 1% of the market, they make $17 million in net profits. It is easy to understand why the big brewers are so interested in seeing microbreweries disappear.
This is all fine and well. The big brewers say, “We support you”, and then they stab you in the back, saying, “We do not support you”. Each time they take over 90% of the market, they in fact grab 91% of the market, that is, $17 million more. They support the microbreweries, because it makes them look good, then they lobby the government saying, “No, not yet, we are not ready. We may need 98% of the market. There will perhaps remain a couple of microbreweries in Quebec and in Canada. This will please us”. This does not make any sense whatsoever.
My time is up but I would like to move an amendment to the motion at third reading stage of Bill C-47. I move:
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.”