Mr. Speaker, it is an honour to rise to speak on behalf of the residents of Kelowna—Lake Country.
Today, we are discussing the finance committee's pre-budget consultation report. I want to start off by saying right out of the gate, and I have talked about this many times in the House, that we as Conservatives oppose all tax increases at this time. That includes the excise tax increase, the payroll tax increase and the carbon tax increase, the last of which increases the price of everything that is shipped across the country.
To set the stage, inflation is at a 40-year high and we know that food inflation is higher. When inflation was around 6%, food inflation was over 11%, almost double.
I did a survey in my community. I send out surveys that go to every residence, and it is amazing how many thousands of people mail them back. It is such great information for me. It is such a great way for me to gain feedback from the community, in addition to all the other types of outreach I do. I would say that over 70% of the people who filled out that survey said their food costs were up 20% to 30%, and food prices can be higher regionally across the country. When food inflation is this high, it definitely makes it very hard for everyone to pay their bills, in particular people who are on fixed incomes, like seniors. It has been reported that 1.5 million people went to a food bank in just one month.
Before I came here to debate this motion today, I had the honour of sitting for a while on the finance committee, where a chief economist from a bank said that he expects insolvencies to increase. The CIBC has said that one in five mortgages it has in its portfolio is in a position where the borrower's monthly payment is not high enough to cover even the interest portion of the loan. People are struggling, and now is not the time to increase any taxes.
What I would like to talk about for most of my time today is the excise tax increase. To go back a bit regarding this tax increase, in 2017, the Liberals put in place an escalator tax on the alcohol excise tax. “Escalator” is just a fancy bureaucratic word for automatic, so it is an automatic tax increase that does not go into budgets and is not debated every year. At the time, Conservatives, industries and stakeholders asked the government not to do it. They were very concerned that it might trigger trade challenges. In fact, it did with Australia. During that time, Australia said that it was unfair, and over the course of a few years, an agreement was made with Australia and was announced on the Canadian side.
I should mention that previously, some wineries with domestically grown grapes that were made into wine were exempt from paying the excise tax. This was done many years ago to build up and assist this value-added industry and agriculture. The agreement made was that these wineries, and we later learned cideries as well, had to start paying this excise tax. That was the agreement the Canadian government announced. However, back in Australia, they were announcing they won the trade challenge, so it was interesting how the communications came out. What has happened with that? The Canadian government has had to come up with different formulas to fix that situation with domestic wineries.
In addition to that, the excise tax is increasing every year, and it is tied to the CPI, which means it is tied to inflation. Therefore, when inflation is higher, this tax increase is higher, which then perpetuates inflation even more. As of April 1, there will be the highest tax increase ever, at 6.3%, and because inflation has been high this year, we are already tracking to have a high tax increase as we go into next year.
Just dealing with this year, this is really going to affect the producers. It is not only the manufacturers, which could be the wineries, breweries, cideries and distilleries, but this tax increase then trickles down to the retailers who will be selling these products. It trickles down to the restaurant owners, who are still having a really tough time coming out of the pandemic, and, of course, ultimately to consumers.
For disclosure, I worked for 27 years in the British Columbia beer and wine industry, so I worked on all sides of the industry. I remember at different times, when, for example, the provincial government was changing some of its formulas around taxation, so winery or brewery operators would have to make a very difficult decision on how long they would absorb that increase.
To really simplify things, as an example, people's wine might be on the shelf at $19.99 a bottle. Now they have to make the choice. Do they put it up to $20.19? It is such an odd number. Therefore, they make the decision to keep it at that price for a while and then realize they cannot and they have to eventually pass this on. They will make a decision. They will take the hit for a while, but ultimately it has to be passed on. Those are the tough decisions that business owners, especially small business owners, make every day.
In Kelowna—Lake Country, there are 27 wineries, 21 breweries, and eight cideries and distilleries combined. These are farm-to-glass industries. These are value-added industries. All of these will be affected. This is just another cost that will be added on, which does not have to be because there is no benefit to those organizations. It is strictly a tax, and we should not be increasing any taxes at this time.
We know that small businesses represent most of the businesses in Canada. They represent most of the businesses in my community.
As I was talking about the trickle-down effects of this, Restaurants Canada shows that more than 50% of the licensed restaurants in Canada are losing money or barely breaking even. Again, as these cost increases are being passed on, it will affect them.
The CFIB reported that the average small business owner took on $150,000 in new debt. Most business owners have not paid off this debt. Of course, with rising interest rates, their debt is costing more. Therefore, for any of them who work in this industry, this will just be affecting them even more.
Beer Canada wrote on behalf of eight brewery worker unions. I will read a quote from it. It states, “Canada is experiencing the highest cost of living increases in a generation. This is squeezing family budgets and making workers in the brewing sector nervous about their jobs.”
Wine Growers Canada wrote to the Minister of Finance and said that with the addition of federal/provincial ad valorem taxes in the pricing chain, the next rise in excise duty would increase wine prices by at least 10¢ per litre, with long-term impacts on restaurants, hotels, bars, retailers, farmers and wine growers.
Members can see that this is going to dramatically affect a lot of these industries.
I wrote to the finance minister recently. I will just quote part of what I wrote to her. I said, “Producers will be left with the choice of absorbing this cost increase and adding it to their debt loads or passing on this cost to both consumers and our restaurant and hospitality businesses, fuelling inflation more.” I have not heard back from her.
I will also say that when I was first elected back in 2019, this was one of the first topics that I started advocating on, because I had so many small business owners in my riding coming to me, saying that this affected them every year, That was before we had this record high inflation.
With that, I am standing with small business owners in my riding and across Canada, and we need to stop all tax increases.