moved that the bill be read the third time and passed.
Madam Speaker, it has taken a long time for the bill to get to this stage, but I want to thank members of this place for collapsing report stage and moving it on to third reading.
The bill was first introduced last year on November 3 and debated for the first time on November 26. The bill was then scheduled for a second hour of debate just before Christmas, but because the Christmas break was early, it was not until January that the bill was sent to the finance committee.
It might be worth noting that what we are dealing with here is section 5 of the Excise Tax Act, which under the current regulations is a three part clause giving effect to impose a hidden 10% tax on watches and clocks, on semi-precious metals and stones and on jewellery.
This has been a very controversial tax, which has been around as one of a suite of luxury taxes since 1918. It was a consequence of World War I, known as the great war at that time. This very tax was the impetus for the creation of the Canadian Jewellers Association which has been fighting this tax for decades. In fact, I talked to one jeweller who had his first meeting with the federal finance minister on this tax in 1947. This is a very heartfelt measure to finally try to end the last vestige of these so-called luxury taxes dating back to 1918.
Consequent to the fact that the bill was sent to the finance committee in January, the federal budget was announced. Support by members of all parties for Bill C-259 was quite strong.
The government put a provision in the budget in February that this tax would be phased out over four years at 2% per year. This in a sense was welcomed, but in another sense there was further division because a bad tax was a bad idea so why not get rid of it in its entirety. Therefore, my sponsored bill continued in the process.
We are here today, still with industry solidarity and just a few months after the budget document, with a real chance to terminate this terrible tax.
Because the committee had already studied the issue several times, I was hopeful the bill would proceed rather quickly to a vote. Unfortunately, it took nearly the maximum allowable time period before the bill was approved. There were several unexplained cancellations and delays before I was able to appear before committee and during that time the February budget was announced.
I believe it was the strong support for Bill C-259 here in Parliament and among the public that prompted the government to include a provision in the budget to phase out the tax over four years. While I was pleased by that, my opinion then and my opinion today is that a counterproductive tax is a counterproductive tax, and so I have continued with the bill.
When I finally appeared before the committee on March 24, the Parliamentary Secretary to the Finance Minister suggested that the jewellery industry did not support my bill and he moved to dismiss it. There have been continuous attempts to undermine the bill at every stage since.
I am pleased to say that the parliamentary secretary was unsuccessful in doing so. I am also pleased to report that the industry is solidly behind the bill as it was ruled in order today by the Speaker in a very straightforward ruling consistent with all of the legal or legislative advice that I have received on the bill since it started its torturous travel through the committee process.
I was not pleased that the bill continued to be delayed. Despite only one outstanding request to appear before the committee, which was quickly withdrawn in an attempt to see the bill move through the committee without delay, the chair initiated a study which further delayed passage of the bill.
In May the Canadian Jewellers Association and the Quebec Jewellers' Corporation appeared as witnesses and strongly supported the bill and the immediate repeal of the excise tax on jewellery if they could be assured that watches and jewellery were both subject to the provisions of the bill.
Mr. André Marchand, president of the Quebec Jewellers' Corporation, testified at the committee that action was needed immediately rather than four years from now. He said:
If no positive action is taken, this may lead to the industry's imminent demise. The situation is critical and we, as retailers, manufacturers, importers and wholesalers are urging you to address this problem in order to once and for all put an end to this flagrant injustice which has gone on too long.
An immediate and complete scrapping of this provision [meaning the taxation] is therefore fully warranted. We would ask you to review your position, thereby enabling our industry to take back its rightful place despite increasingly tough competition.
The Canadian Jewellery Association also called for the immediate elimination of the tax. The president of the CJA, Carmen Rivet, said:
We have always asked for its immediate and total elimination. This is what we fought for and that is what we have always hoped for.
The testimony of the jewellery industry representatives prompted the committee to pass an amendment to the bill. Bill C-259 was amended to include watches, which I am told made up a significant part of a jeweller's business. I think this greatly strengthened the bill. There was some argument whether the amendment was within the scope of the bill but it was ruled, both at committee and again earlier today by the Speaker, that it certainly was in order.
The bill was passed as amended at the committee on May 19 bringing the bill where it is today before the House.
I believe the time has come to scrap this tax and I urge members of the House to pass Bill C-259.
At this time I would like to share with the House some of the numerous letters I have received in support of the bill and I will read some of the ones I received following the introduction of the federal budget as well.
This is from a jewellery retailer employee who said:
I can't emphasize enough how important it is to eliminate the Excise Tax all at once (instead of phasing it out). The administrative and logistics costs are enormous, and the thought of having to deal with the paperwork and meetings over and over for the next four to five years makes my head hurt.
Please do what you can to let your peers know how much time, effort, and money would be saved by taking care of this once and for all!
I have a letter from the Quebec Jewellers' Corporation dated April 6 of this year. It goes on to explain that:
A clause in this law exempted artisans from the excise tax if they manufactured a maximum of $50,000 per year.
It then became easy and practical to shut down a company as soon as this amount was reached and open new ones as often as needed.
This is another way a bad tax has contributed to tax avoidance behaviour that has been very destructive and undermining of the industry.
Speaking on behalf of the corporation, the president went to say:
Reluctantly, we accepted to spread out the removal of this tax over a period of four years while being convinced that it would have been better to fully abolish this tax as soon as the budget was presented.
We would like to understand why the jewellery industry was dealt with in this fashion, when all other “luxury” industries that were subjected to this same tax benefited from the total repeal of the tax as soon as it was accepted.
In the name of all retail jewellers, manufacturers, importers and wholesalers that we represent, we enjoin you to correct the current situation and terminate once and for all this blatant injustice that has already lasted too long.
For those reasons, we fully support Bill C-259 and the immediate elimination of the excise tax on jewellery.
An immediate, total and complete repeal is fully justified and will allow our industry to reclaim its place despite an increasingly more constraining competition.
This will open the door to healthy competition and place us in a position to respond to a tax originating from emerging countries and the local industry.
I have another letter from Idar Bergseth Designs Inc. which reads:
It is very important for us, not due as much to the cost of the tax, as it is the punitive nature of administering it as craftspeople. It takes us several hours a month just to calculate the tax properly, tracking every piece of inventory, every stone, every finding, and knowing at what stage excise was paid on it.... It's an administrative nightmare.
One other thing that should be pointed out is that much of the slave made jewellery from Asia comes into the country with invoices that are not completely in agreement with the actual cost to the importer. As the goods are taxed at 10% of the value as stated on the invoice, this puts the honest Canadian manufacturers and craftspeople at a further disadvantage.
I have another letter from Pearls Katsuyama, a division of Paramount Trading Co. It states:
As a current member of the Canadian Jewellers Association in good standing, we fully support Bill C-259, in eliminating the unfair Excise Tax immediately.
We have been in the jewellery business for forty years and have supported the efforts of the Canadian Jewellery industry to repeal the tax for many years. It should have been eliminated when the GST legislation was put into place more than ten years ago. At that time, excise tax on all other luxury goods such as fur coats and high priced pleasure boats was eliminated. Only the jewellery industry was burdened with the tax. This affected the growth of our industry and encouraged unlawful import and sale of jewellery and watches. Even a fifty dollar jewellery item or a watch was and is still subject to the excise tax. A huge majority of all the jewellery business owners and those in control, including the presidents of two of the largest retail jewellery chains in Canada are in favour of the full repeal of the excise tax immediately. Eliminating the discriminatory tax on jewellery, watches and clocks will ensure a healthy and growing jewellery industry in Canada, producing new jobs and earning more taxes for our country.
I will finish with a small paragraph from another letter writer. It states:
Thank you for your support on abolishing the truly unfair tax on our industry. You have taken a great direction in terms of reducing smuggling/black-marketing and organized crime and real tax evasion which have festered under this ridiculous cash grab. This tax has caused me grief for thirty-three years [and has] prevented me from competing with smugglers who buy sell for cash.