moved that Bill C-11, an act to amend the Excise Act, the Customs Act and the Tobacco Sales to Young Persons Act, be read the second time and referred to a committee.
Mr. Speaker, I am happy to rise today to speak in favour of Bill C-11. As Minister of National Revenue, I have a responsibility to do all I can to maintain and protect the integrity of the Canadian border and to ensure that Canadian tax laws are respected. For these reasons, I have been deeply affected by the dramatic increase in smuggling.
Some people still argue that it is a regional problem and that the federal government's four-point program to fight smuggling and tobacco use only hinges on regional interests. That is totally false.
The growth of the smuggling trade in Canada, especially tobacco smuggling, is a national problem requiring a solution at the national level. Let us look at the facts.
Contraband tobacco amounts to some $5 billion or about 40 per cent of the $12.4 billion Canadian tobacco market.
This means that about $1.6 billion worth of contraband cigarettes are sold in our communities, on our streets and in our schools every month. As a result, unfortunately, our young people who want to start smoking now have practically unlimited access to cheap contraband tobacco. This situation clearly undermines the federal and provincial governments' efforts to discourage tobacco use through high prices.
This means that smuggling is undermining both federal and provincial efforts to discourage smoking. Unfortunately the problem we are facing today does not stop there. Smuggling has cost the federal treasury approximately $1 billion in the last fiscal year. It cost the provincial treasuries another billion dollars in the past year.
These are direct losses that cannot be recovered, but these revenue losses have been increasing sharply in recent months. Smuggling is therefore, in my opinion, undermining our fiscal situation and our social programs at both the federal and provincial levels. The problem is growing. This problem is intolerable.
Revenue losses are not the whole problem. Because the smuggling trade is increasingly run by organized crime and according to enforcement agencies organized crime now con-
trols most of the $5 billion tobacco smuggling trade, literally billions of dollars are being funnelled out of the hands of Canadian citizens and into the hands of criminals who also ply their illegal trade in alcohol, paramilitary weapons, drugs, immigrants and other contraband products.
In a nutshell, the only beneficiaries of the current situation are the gangs of criminals who sell drugs in our schools, arm our offenders and destabilize Canadian society. The losers are the majority of Canadians who obey the law, pay their taxes and want to live without fearing for their safety. The situation keeps getting worse.
Smuggling also has a detrimental effect on law-abiding small merchants; it is pushing these people to the brink of bankruptcy. In short, smuggling penalizes Canadians who want to earn an honest living.
Smuggling undermines the rule of law in this country and hampers the government's efforts to reduce tobacco use, mainly among young Canadians. It also robs federal and provincial finance departments of important revenues.
As the Prime Minister said two weeks ago in this House: "We are dealing with a problem of law enforcement and organized crime, with health issues, with federal-provincial relations-"
Yet despite the wide ranging breadth of the issue and the impact it is having on our communities, on our social system and on respect for the law, there are still those who argue that it is a regional problem. These people point to the province of Quebec and say: "They have a problem but we don't". The evidence simply does not support such a simplistic position.
Let me go over some of the statistics for members. It is true that the smuggling problem is currently most acute in Quebec where it has been at least until very recently. It is also true that it has grown and was growing in that province. It has been growing alarmingly in every other province of the country.
I ask hon. members to consider the facts. The market share of contraband tobacco was estimated at only 9 per cent in Quebec four years ago. Today contraband represents an estimated 60 per cent to 65 per cent of the Quebec market.
Contraband tobacco represented about 12 per cent of Atlantic Canada's tobacco market in 1990 or four years ago. Today contraband constitutes approximately 40 per cent of that market. In 1992, only two years ago, contraband tobacco represented 13 per cent of Ontario's tobacco market and today it represents close to 35 per cent.
In the west where the smuggling problem is clearly less acute at the moment, contraband tobacco accounted for only 9 per cent of tobacco sales a little more than a year ago. However today contraband tobacco in western Canada has increased to 15 per cent of the market. That in terms of growth is a 60 per cent increase in one year.
It is perverse to continue to view this problem as a problem of only one province. There is an obvious trend to which members and the Canadian public must pay attention. Whether one lives in the maritimes, in Ontario, in Quebec or in the west, smuggling is growing at a rapid rate across the country and has become a national problem.
I will now deal with lessons to be learned.
First, inaction is not a solution. It is no longer possible to ignore the problem. Obviously, if we do not take energetic measures now, the amount of contraband tobacco in our communities will continue to grow and organized crime will continue to grow rich from the illegal profits.
The former Conservative government let the smuggling problem grow to such an extent that the present government cannot tolerate it today. Our government refuses to look away and pretend that the problem can be solved by half-measures. We also refuse to pretend that the smuggling problem affects only one region of the country.
Smuggling is a national problem, so the solution must also be national in scope. We must take strong measures now. We cannot allow cheap smuggled tobacco to continue to come into our communities and into the hands of young Canadians. We cannot allow the rule of law in this country to continue to be flouted. I repeat: inertia and half-measures are not realistic solutions. That is why today I support Bill C-11, an act to amend the Excise Act, the Customs Act and the Tobacco Sales to Young Persons Act.
The proposed amendments support the government's four-point initiative to fight tobacco smuggling and use. With these amendments, we will give Canadian police authorities additional legal powers to fight smuggling. We will also improve the government's efforts for young people's health.
Taken together, the amendments tabled in the House will help establish the integrity of Canadian laws and the Canadian border and, perhaps most important, stop the increase in smuggling in regions of the country where it has not yet reached disturbing levels.
Therefore the first amendment in the bill applies to the Excise Act. It will effectively increase the resources that can be brought
to bear in the fight against smuggling. It will do so by allowing the government to give to police forces other than the Royal Canadian Mounted Police the authority to enforce sections of the Excise Act that allow for the seizure of tobacco, alcohol and vehicles used in illegal smuggling activities.
The government will be able to provide provincial police forces-in particular the Sûreté du Québec and the Ontario Provincial Police but also municipal police forces-as appropriate with the additional legal tools they need to combat smuggling and the organized criminals who control the smuggling trade. This means there will be a substantial increase in the level of police resources working with the federal government to put an end to smuggling.
Second, the proposed amendments to the Customs Act and the Excise Act will provide police forces with the authority to destroy certain seized products without hindering the ability of authorities to carry out prosecution successfully. This reduction in the storage of contraband will save Canadian taxpayers over $200,000 a year by eliminating the storage costs of the property seized.
Third, we have a proposal to amend the Excise Act in order to clearly stamp individual cigarettes on which taxes have been paid. I might add that while there may be some technical questions yet to be determined, it would also be possible to mark individual cigarettes that are in duty-free shops or individual cigarettes which have been exported. We will have a differential ability to have individual cigarettes marked to indicate what particular taxes have been paid on them. This will allow law enforcement agencies to identify more easily those smoking contraband tobacco products.
Fourth, we have two proposed amendments to the Tobacco Sales to Young Persons Act. The first will make it illegal for tobacco manufacturers to package cigarettes in packages containing fewer than 20 cigarettes. This will effectively kill the so-called kiddie packs of six or a similar number of cigarettes.
The second amendment to the Tobacco Sales to Young Persons Act will prohibit the importation of tobacco products into Canada by a person under the age of 18. This is complementary to other measures that will be taken internally to reduce the possibility of possession of tobacco by people below that age.
As a result of these two measures and other provisions young Canadians should find it greatly more difficult to obtain tobacco products.
The four-point plan to fight smuggling and tobacco use is a comprehensive action plan which deals with the whole smuggling problem, and Bill C-11 is an integral part of this plan. It deals with the need for tougher enforcement in the fight against smuggling. It deals with the need to get rid of organized crime which controls smuggling activities. It also deals with the need to protect the health of young Canadians. In short, Bill C-11 is an integral part of the government's solution to a national problem.
For these reasons, I ask the House to support the passage of Bill C-11.
