Mr. Speaker, it is a pleasure to rise on Bill C-232. I congratulate my hon. friend from Huron—Bruce for his quite obviously diligent work on this issue. Perhaps in the future we can contemplate having a wee dram over this or any other issue in the House. I congratulate him on his work. However, sadly, many of us on this side will be unable to support this bill.
The Government of Canada is focused on helping middle-class Canadians have more money in their pockets so they are able to save for retirement and provide for their families.
We know the single-best thing we, as a government, can do for Canadian businesses, including our spirits industry, is to create a strong economy with a strong customer base, a strong consumer base, a middle class that feels confident about the present and the future, and is on a secure financial footing.
This is exactly what the Government of Canada has helped to support and sustain. In budget 2016, we have taken an essential step to revitalizing the Canadian economy. Budget 2016 puts people first and delivers the help that Canadians need. It is an essential step to restore prosperity to the broadest cross-section of our consumer base, the middle class.
That is why the first item the Minister of Finance introduced in his motion earlier this week was the Canada child benefit. Compared to the existing system of child benefits, the new Canada child benefit will be simpler, tax free, more generous, and better targeted to those who need it most. It will put more money in the pockets of nine out of ten Canadian families. Families will receive an average of $2,300 more annually. This is the most significant social policy innovation in a generation.
Furthermore, Mr. Speaker, almost nine million Canadians already benefit from the middle-class tax cut that the government introduced in December. Those measures demonstrate leadership at critical times. They support Canadians when and where they need it most.
Our spirits industry plays an important role in our diversified economy. My hon. colleague gave a good description of the nature of the industry. As we discuss the tax reduction proposed in this bill, it is important to first note that the rates of excise tax have not changed in 30 years. This means that our producers already enjoy a lower real rate of taxation because of the effect of inflation over the years. There are few or no strategic reasons for using the excise tax system to provide financial support to the spirits industry.
Spirits Canada, an important industry stakeholder, has said that any reduction in excise taxes should be reinvested in export markets and used to increase distillers' profit margins. There is no indication that the savings should be passed on to the average Canadian consumer in the form of lower prices.
Our spirits industry is an important player in our diverse economy. As we discuss the rate reduction proposed in this bill, it is important to first note that the excise duty rates have been effectively unchanged for 30 years. This means that our producers are already benefiting from a diminished real rate of taxation due to inflation since then.
There is little to no policy rationale to use the excise tax system to provide financial support to the spirits industry. Spirits Canada, an important stakeholder for the industry, has indicated that any relief in excise duty is meant to be reinvested in export markets and increase the profit margins of distillers. There is no indication that any savings are meant to be passed on to the average Canadian consumer in the form of lower prices.
Indeed, since exported alcohol products are completely exempt from federal excise duties, it is fair to say that the average Canadian consumer would likely pay the cost for producers charging lower prices in overseas markets without benefiting from savings in Canada.
Standard servings of beverage alcohol products, based on a 17 millilitre volume of absolute ethyl alcohol, are subject to varying amounts of federal excise. The higher relative duty on spirits has been a long-standing feature of the alcohol taxation structure both at the federal and provincial levels and is consistent with the fact that spirits are generally higher-value products.
The Canadian distilling industry is dominated by multinational companies that are export oriented, with over 70% of annual national production being exported. Since exported alcohol products are completely exempt from federal excise duties, most domestic spirits production would not be affected by any excise duty reduction. Instead, domestic consumers of Canadian spirits would likely pay for the cost of producers charging lower prices in foreign markets.
A general excise duty reduction would also apply in the bill to imported spirits products sold in Canada, which account for roughly one-third of all domestic sales. If this reduction is similarly not passed on to consumers, it would result in a large windfall gain for either provincial liquor boards, which are the sole legislated importers of spirits into Canada, or the foreign producers selling to those liquor boards.
Perhaps most important, tax policy programs targeted exclusively to Canadian producers or products face, as my colleague for Laurentides—Labelle raised, the risk of being considered offside international trade rules, as this could be considered to discriminate against imported products.
The current excise duty relief provisions targeted for Canadian beer and wine were already the subject of a 2007 World Trade Organization dispute brought by the EU. This dispute was ultimately settled by Canada agreeing to provide compensatory tariff reductions on affected products.
Canada continues to face significant international pressure against its existing measures. Any new tax measure benefiting domestic spirits would probably result in new trade disputes against Canada.
There is another way to look at this issue: if excise taxes were reduced on domestic products and other countries took retaliatory measures, the reduction could jeopardize exports by the spirit industry, which is the very industry my colleague wants to defend. These exports represent a significant part of this industry's activities.
I would also like to point out to the House that establishing a new excise regime for domestic producers could be seen to contradict the position taken by Canada in international trade disputes. At the request of Spirits Canada, Canada recently joined the EU challenge of the discriminatory tax treatment of spirit imports in Colombia.
People work hard, and they expect their government and their economy to work hard for them in return. At the core of our plan is the notion that when we have an economy that works for the middle class, we have a country that works for everyone.
Budget 2016 is the first step in that plan. This approach means new investments in skills and labour strategies, and in innovation to unlock the potential of greater productivity. Those are the real drivers of economic growth and job creation.
Our goal remains the same. We are committed to strong economic growth, and we need the resolve to follow through on sustained strategic investments guided by a vision of the future in which all Canadians have a real and fair chance at success. This is our government's central mission. We are choosing to take advantage of a historic opportunity to invest in people and the economy, and to prepare Canada for a brighter future.
Of course, we recognize that this is only the beginning. We have much work ahead of us, but we know there is no limit to what we can achieve as a country.