Mr. Speaker, since this is the first time I am speaking in this House this year, I want to take this opportunity to express my best wishes for the new year to all my colleagues, my constituents and Quebeckers and Canadians. May 2005 be the best year possible.
I rise this morning to speak to the bill to eliminate the excise tax on jewellery. This tax has existed since 1917. It was introduced to help meet financial needs during the First World War. After the war, the federal government followed its usual practice and kept the tax. The war was over. The tax still exists today.
In my opinion, we need to fix the way our files are handled, to some extent. I am referring here to the speech by my colleague from Portneuf—Jacques-Cartier, who rose on November 26 to make the Bloc Québécois' position known as soon as the debate started. Our position on this is quite clear and has been so for some considerable time. Representations were made to the Standing Committee on Finance. As early as December 1996, we stated that the excise tax on jewellery should be abolished. Our party, like all parties represented on the committee, had accepted this recommendation, which the December 1997 report reiterated in its entirety.
Subsequent representations were, in fact, made. The Canadian Jewellers Association wants this tax to be eliminated. Believe it or not, It still applies to the sale of jewellery over $3, when clearly things have changed. In terms of the overall federal budget, abolishing this tax would generate additional costs of $55 million, although we know what effect this would have on the labour market. We must not forget that in Canada, for example, a diamond market is developing and becoming established.
A round table, created by the government through natural resources, wanted this 10% tax to be eliminated in the context of the development of a Canadian and Quebec diamond industry. Various parts of Canada, but especially Matane, in eastern Quebec, are interested. A diamond-cutting school is being set up and an industry will possibly follow. Now would be a good time to eliminate irritants such as this 10% tax on jewellery.
This tax is included in the price. It can be a fixed amount added to other products. For jewellery, it represents 10% of the price. It still applies to gasoline, tobacco, alcohol and jewellery. In most cases, the aim is to discourage the sale of such items. This is not the case for jewellery.
When this tax was put in place, there was no GST as there is today on purchases. If someone buys a costly piece of jewellery, there is GST charged on it already. At this time, the excise tax is nothing but a hindrance to the development of an industry that needs to become more established. I have referred to the diamond industry, but this is also the case for all the jewellery stores in our ridings, be they large chains or smaller family businesses or the like.
The government therefore absolutely must do something in the coming budget. So much the better if this bill were debated and passed now. The government could be proactive and take the step in the coming budget of abolishing this tax, particularly since it has the backing of the industry involved, as well as the Standing Committee on Finance. In light of the present financial situation, the government ought to do the math, because I am not convinced that, when it comes down to it, it is currently a winning proposition to keep the 10% excise tax. This is a federal tax collected on items that are either imported, manufactured or made in Canada, based on the fair value of imports or the selling price of items manufactured in Canada.
The Bloc Québécois calls upon the members of this House to vote in favour of this bill so that this outmoded tax can be done away with, thereby giving a worthwhile boost to the jewellery industry. A number of people in our part of the country own businesses in this sector. This would, in some ways, also be a means of counteracting the negative effects of globalization and allowing our businesses to offer products to consumers at attractive prices.
People tell us this is a tax on luxury items. However, as the president of the Canadian Jewellers Association said, there are basic products we should be able to buy, because today they are part of regular commerce. There is already another tax that can compensate, that is the GST on the value of the item. Consequently, the fact that an item is taxed from the value of $3 is, in our opinion, completely archaic and outmoded.
The jewellers argue that the tax is unfair because it applies only to their products, thus lowering their sales. In the end, it costs jobs and encourages smuggling and the black market. For these reasons and having assessed the financial impact of such a tax, the Bloc Québécois considers that eliminating it is preferable.
Thus, we will support Bill C-259, an act to amend the Excise Tax Act (elimination of excise tax on jewellery). We believe it is important for the House to take this step.
In conclusion, there are many areas of Canadian taxation policy that need to be cleaned up. It is time for spring cleaning and for a new kind of organization. This is one very clear and very obvious sign. In my opinion, we are no longer in the 1994-2004 period, where the watchword of the current Prime Minister, who was then finance minister, was to wring out every last drop to bring in money. We saw the results of this in the employment insurance fund, from which $45 billion was taken to pay off the deficit and to spend on anything but the employment insurance system.
In practice, we are facing the same situation with respect to this tax. It was a way to accumulate as much money as possible. For the entire economy, the federal government must see itself as a government rather than a corporation. The point is not to amass as much money as possible in the federal government's treasury, but to ensure that there is a balance and that our taxation system corresponds to the economic realities of today.
Therefore, for all these reasons, the Bloc Québécois will vote in favour of this bill.