Mr. Speaker, I certainly can appreciate that many people probably want to hear the previous speaker more than me. I will try to do her justice as I move forward, and I will appreciate listening to her speech later.
As members know, it is always an honour to rise in this place on behalf of the constituents of Central Okanagan—Similkameen—Nicola. It is a very important debate for me and for all of us for different reasons. I will highlight one of the reasons that is very important to me.
As some members will know, I come from one of Canada's premier wine producing regions. Other members of this place represent regions that are also renowned for producing fine Canadian wine and, increasingly, craft ales, even artisan spirits. A few even have large-scale breweries that are huge employers in their home ridings. I mention these things as Canada's wine, beer, and spirit industry is an important one for many regions of our country.
There are some very serious concerns from this industry as it will be extremely impacted by some proposed measures in this bill. In short, let us call it what it is: the escalator tax. For the benefit of those watching or who may not be old enough to remember the last time an elevator tax was used, it was by the former Pierre Elliott Trudeau government.
Every year the tax rate on most wine, beer, and spirits sold in Canada will be subject an annual tax increase, linked to inflation, an annual tax increase that will not be linked to a budget that must be passed and debated in this place each year. Rather, unelected bureaucrats will hike the tax based on the consumer price index, locked in, potentially for who knows how long, all from this one budget.
Why is that a concern? Let us start with the obvious.
As parliamentarians, we should always be concerned when, in effect, we see stealth taxation, where a tax will increase every year without debate or scrutiny as it does not have to be signed off by the finance minister in each budget. It just automatically happens whether we, as parliamentarians, whose job is ultimately to scrutinize government spending, especially with taxes, and authorize it. This is a big concern.
Is this truly a precedent that the Liberal government wants to set? Where will the line be drawn? How many more stealth tax increases via an escalator tax will it sneak in?
We all know that the use of escalator taxes was halted in the 1980s by former finance minister Wilson, because it was the wrong thing to do in the economy. We heard from the spirits industry that it devastated many Canadian success stories when the government linked inflation to an annual escalator for taxes.
Now maybe some on the Liberal side of the House think this is a good idea. I do not profess to know how they can defend this escalator tax. When I did a report on this topic to my constituents last week, all were universally opposed. Even those who generally supported Liberals were clear that this would lead to a form of taxation without representation. One individual made a very interesting comment. Canada was once known as a nation of savers. These types of stealth escalator taxes attack those principles.
However there is another consideration, which is the literally hundreds of small, medium, and even large-scale business that collectively produce wine, beer, and spirits. As we know, the Department of Finance estimates this new escalator tax will suck an extra almost $500 million dollars out of the Canadian economy and send that money to Ottawa over the next five years. Of course this is all about that.
The Liberal government knows, fiscally, it is in serious trouble. Every single fiscal promise from the “modest” $10 billion a year annual deficits to a return to a balanced budget in 2019 has been broken. The finance situation is so severe the finance minister actually spiked a report from his own department claiming not until 2056 would Canada possibly return to a balance.
Seriously, try to even get the finance minister to utter the words, “balanced budget”. Not even Liberals on that side of the House, although they can try, can achieve that.
This is a blatant tax grab with absolutely zero consultation whatsoever on how an additional half a billion dollar tax grab on this industry might impact it. To many of my constituents, this is really the offensive part.
The Liberal government is happy to give a $327 million loan to help finance a carbon-burning aircraft to a company that openly stated it did not need the money. Owners of wineries, craft breweries, and distilleries get $500 million in costs downloaded to them and their customers. What impact will this have on the industry? Does the Liberal government even know? Better yet, do the Liberals care?
Many in the industry feel abandoned, and that is the problem when a government decides to pick winners and losers in the private sector. In fact, one winery owner recently commented that if only that winery had bottled a pinot supercluster, maybe it would have fared better treatment from the Liberals.
We also have one other problem. A large segment of our domestic wine, craft, and spirit market is made up of products from outside of our country. This is in large part because we lack the domestic capacity in many cases to serve our own market. The upside of this situation is that we have room to grow and expand for Canadian producers. At least we did have that opportunity until the Liberals decided to tax them out of existence.
The other challenge is that foreign producers, for a variety of reasons, could have a case now to present a trade challenge. The finance committee actually received a letter from the European Commission outlining that it had grave concerns about it and planned to challenge it in an upcoming trade challenge as some products were becoming more expensive now and, in some circumstances, in a manner that 100% Canadian-produced wine did not.
Let me be clear. Right now, the policy is that if producers make Canadian wine using 100% Canadian grown produce, which helps our farmers, they are exempt from excise. However, those who use products from outside of the country or who import from places like Chile, Spain, Italy, Germany, and the United States also have to pay excise, so they will also be on this automatic escalator, every year their prices being higher. As we know, a trade challenge can be very harmful on an industry, much as we are seeing now with softwood lumber.
That is why it is so deeply concerning to see the Liberal government implement these draconian charges with zero consultation and no thought as to how it may adversely impact an import industry that then may cause us trade grief.
I would like to make it clear that I am not trying to fearmonger. These are real concerns that can be factually verified. As the elected representative for a region that may be adversely impacted by these changes, it is my responsibility to illustrate these serious concerns here. It is my intention that all members ponder them and ask serious questions of the Liberal government.
Before I close, I would like to point out today that seven out of 10 bottled wines sold in Canada are made outside of Canada. We know we are entering some of the most unprecedented new trade opportunities. However, if the cost of doing business in Canada continues to increase through new escalator taxation, higher payroll costs, increased CPP, and more, we very well could see examples of where companies like Procter & Gamble move production into lower cost regions outside of Canadian borders. With Procter & Gamble, 500 well-paying, middle-class jobs were lost. Not even the Liberal government, using borrowed money, can afford handouts to all of them.
This is the reason business investment has declined in Canada every quarter since the Liberal government was elected. I will submit it will continue to decline if costs of doing business in Canada do not remain competitive. An escalator tax means that every year we become less competitive. We cannot afford this. That is why I remain opposed to these measures and will be supporting the amendments proposed by the member of Parliament for Louis-Saint-Laurent, with whom I have had the great pleasure of serving as his deputy finance critic.
I stand opposed for the people, not just those in Central Okanagan—Similkameen—Nicola but for the many people who contribute to our economies right across our great country. The escalator tax will not serve the purpose. The government will see less revenue, fewer jobs, and trade challenges that will harm and decimate our industry if they are successful.