Mr. Speaker, I am pleased to rise in the House today to speak to Bill C-47. At the outset, I would like to say that I will be splitting my time with my friend and all around great guy, the member for Medicine Hat.
Bill C-47 attempts to amend the Excise Tax Act. I will begin my remarks by taking this opportunity to first of all thank my leader, Stephen Harper, for entrusting me with the responsibilities of critiquing the government as the senior opposition critic for national revenue.
As we know, the Canadian Alliance is dedicated to reducing the size and scope of the federal government in order to deliver meaningful tax relief to hard-working Canadians. As a small business owner, I have firsthand knowledge and experience in dealing with the difficulties inherent in complying with CCRA regulations and remittance schedules. I look forward to being an advocate on behalf of millions of Canadian small and medium sized businesses that prosper in spite of the federal government's insatiable appetite for tax revenues.
Bill C-47 addresses excise tax. Although I am opposed to the government's intervention into the freedom of choice of Canadians through taxation, I will be supporting the legislation as it has been endorsed by industry stakeholders and modernizes the framework of excise taxation on wine, spirits and beer.
The proposed excise tax 2001 aims to replace the existing old and antiquated administrative and enforcement structure governing alcohol and tobacco products with a modern regime reflecting current practices. It does not address the tax rate and base matters other than to ensure equitable treatment between domestic and imported products.
The proposed act shifts compliance and point of taxation from a sales levy to a production levy for the production of wine. This is already the case for distillers.
The changes introduced for spirits and wine are regulatory in nature and tax neutral. The primary purpose of these changes are to modernize how these products are taxed 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 the government if it felt unfairly 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 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 up to $1 million and up to five years in jail for indictable offences. These are industry-led, spirits and wine, and supported changes. There are no losers because of this legislation with the exception of contraband producers.
It is the second aspect of Bill C-47 with which I personally have problems. The bill also seeks to increase the federal excise taxes on tobacco products and to re-establish a uniform federal excise tax rate 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 federal excise taxes on cigarettes will increase $2.00 per carton in Quebec, $1.60 per carton in Ontario and $1.50 per carton in the rest of Canada. This will bring the total federal excise burden on cigarettes to $12.35 per carton. Federal revenues will increase by approximately $240 million per annum through this tax hike.
We all want Canadians to live a healthier lifestyle, especially our youth. The reduction of smoking is a big part of that. My problem with this legislation is philosophical and based on the process. The past decade has proven that high levels of excise tax on cigarettes do not reduce consumption. It only creates an underground market. The role of government is to provide information for consumers to ensure that citizens have an informed choice. Make no mistake, it is the right of individuals to choose whether or not they want to smoke.
It is my belief that the government is increasing the tax levels simply to increase revenues. It is the only politically correct tax increase at its disposal, and the finance minister has never found a tax he did not like.
There are many Canadians out there who believe that excise taxes are dedicated to specific spending, that tax revenues on cigarettes and alcohol are spent on health care and that gas tax revenues are spent on roads. The truth is that while federal excise revenues have increased, transfers to provinces for health care have decreased.
What are Canadians going to get in return for this blatant tax grab? I challenge the government opposite to detail what its plan is for the revenues.
Contrary to what the government thinks, Canadians are not stupid. The tax increase is of the same ilk as the airport security tax. The Liberals are manipulating the concerns of Canadians to finance their next election campaign. The government opposite cannot escape its past nor its record. The transitional jobs fund, Shawinigan, Groupaction and everything Alfonso Gagliano ever touched raised doubts in the minds of Canadians regarding Liberal accountability, ethics and fiscal restraint.
The Liberals have once again piggybacked meaningful legislation and political opportunism. The Prime Minister in the past has appointed a qualified Canadian and a Liberal hack to the other place at the same time. When one criticizes a patronage appointment, the Liberals defend it with the credentials of the qualified candidate. Today they are hiking taxes under the guise of tax fairness, and that is unethical. The Liberals are politically savvy and ethically devoid.
I will support the legislation because it is in the best interests of Canada's emerging industries. However through this piece of legislation, the government has added another chapter to the red book of Liberal shame.