Paul Szabo

[Excise Act, February 22nd, 1994]

Mr. Speaker, it gives me pleasure to rise on this matter because again we continue to stray away from the fundamental thrust of the government's proposal and that is to break the back of smuggling now, not to deal with it after it has happened.

That is one of the reasons why the government introduced the excise tax reduction, the export tax addition and the surtax on manufacturers. It was to ensure that the combination of those actions would eliminate the profit incentive to the smugglers and break the back of smuggling.

The member has missed the point entirely and so has the entire Reform Party. I am absolutely astounded that after four or five hours' debate it continues to have such a narrow view of the world.

[Excise Act, February 22nd, 1994]

Mr. Speaker, I rise to comment on an issue that has been coming hour by hour from the Reform Party throughout this debate and it has to be stopped.

The argument being made is that the reduction of the excise tax on tobacco is a singular event and has no consequence on anything else the government did. The whole point of the initiatives brought in by the Prime Minister, the Minister of National Revenue and Minister of Health was to break the back of smuggling.

To break the back of smuggling they had to eliminate the profit motive. The combination of the reduction of excise tax, the export tax that was levied and the surtax on manufacturing collectively represent the elimination of the profit in smuggling.

If we eliminate the excise tax and apply the tax totally to export taxes, if we allow export taxes and that surtax to deal with it totally, all we are doing is shifting the burden from exports to the U.S coming back into Canada and forcing the creation of underground manufacturing facilities in Canada.

Members really have to open up their minds to understand that there is a comprehensive approach to one of the most serious problems that the government has had to face in its first three or four months of operation.

[Excise Act, February 22nd, 1994]

Mr. Speaker, there is no question in the estimates provided by ministry officials that in the near term there would be a net cost. However I have to applaud the minister and the Prime Minister for not anticipating some other benefits. One of the problems governments have had is anticipating revenues or benefits.

As a clear example to the extent government introduces tough measures to deal with tobacco smuggling, that same framework and mechanism would also apply and create some benefits with regard to alcohol, drugs, arms smuggling, et cetera. None of these have been discounted or included in terms of the benefits that will accrue to the country as a result of these initiatives.

I wish I could be more specific as to the economics of the plan. Suffice it to say in the short term there may be an argument as to net cost. Clearly however government officials, business, industry and all Canadians believe the program is the right one for the long term.

[Excise Act, February 22nd, 1994]

Mr. Speaker, it is fair to say a reduction in the excise tax alone, disregarding anything else in lowering the price of a commodity would obviously make it more attractive to the marketplace. The hon. member's premise, however, is that having reduced the excise taxes it is hurting business. I do not imagine he considered that the contraband smuggling taking place had no impact on small business.

The idea of the government's initiative is to deal with contraband smuggling because every Canadian and every business in Canada is losing as a result of it.

[Excise Act, February 22nd, 1994]

Mr. Speaker, I am pleased to rise on the debate on Bill C-11. I rise wearing many hats.

As a chartered accountant, I believe I have the ability to understand the financial implications of Bill C-11. As a former member of the Mississauga hospital board for nine years and serving as its vice-chairman, the health impacts certainly were of significant importance to the health care institution. As a member of Parliament representing my constituents and listening, as have many members, I have received numerous interventions from them asking questions and making suggestions on how we might further improve the legislation with regard to the health impacts and indeed with regard to smuggling.

I also speak as a father of three. I have three children aged 12 through 19. I am concerned of course about the implications to my children and whether or not they will make the right decisions for them. There is a choice for Canadians.

I have been somewhat concerned about the confusion that may arise for the Canadian people as they listen to the debate from the context of an excise tax reduction alone. I want to clarify this. I think it is going to be very important for Canadians to understand that we have here a complex problem that is being addressed.

In my experience, for every complex problem there is a simple solution and it is wrong. I would like to outline, as we have already heard from the Minister of National Revenue, from the Solicitor General and from the Minister of Health, that this is clearly not a regional problem. It is a national problem.

Therefore the government on February 8 came forward with a four point program to deal with this complex problem. It understands that the cheap contraband tobacco has undermined Canada's health objective to reduce smoking, especially among young people. The issue is no longer how to keep prices high so that young people do not smoke. That is not the issue. The issue is how to keep contraband cigarettes out of the hands of young people.

I would like to make sure that all members understand clearly the dimensions of the problem. The problem is very severe. To give an idea to all members in the House, between 1990 and 1993 the number of seizures by the RCMP increased from 303 to 5,044 over a four year period. With regard to the value of those seizures, the increase went from $4.1 million in 1990 up to $53.5 million in 1993.

What about exports? We all have heard that the major source of the contraband smuggling has been exports to the United States, 90 per cent of which are coming back into Canada. Exports in 1990 were 11.3 million cartons. Yet in 1993 the exports were 62.8 million cartons. Clearly the dimensions of this problem are immense and growing very rapidly.

Finally, with regard to the number of charges that have been laid by the authorities with regard to smuggling, in 1990 there were only 414 charges laid whereas in 1993 there were 3,389.

I am sure all members would agree we are not dealing with ordinary circumstances. We are dealing with a major problem. That must give members an idea of the magnitude of the disrespect that has been shown for the laws of Canada.

As has been pointed out by many members, but it bears repeating, illegal tobacco now accounts for 40 per cent of the Canadian tobacco market. Organized crime controls up to 95 per cent of contraband tobacco entering Canada.

Furthermore, more than two million Canadians are buying this contraband. More than $1 billion of federal revenue and an additional $1 billion in provincial revenues has been lost as a result of this smuggling activity.

Hon. members must ask themselves this. If we are losing to our one taxpayer $2 billion of revenue that could go to health care, social programs and employment initiatives, how can we ignore the problem?

On February 8, the government did come down with a four-point plan: the enforcement crackdown, a reduction of consumer taxes, a special action on tobacco manufacturers and also an initiative of the largest anti-smoking campaign in Canadian history. That was the initiative of the Prime Minister.

He spoke in the House eloquently, outlining to Canadians that having had full consultation with the provinces, having fully assessed the input from all sectors with regard to this complex problem, it was necessary for us to have a well rounded, comprehensive solution to deal with all aspects and not simply the health impacts as hon. members from the Reform Party seem to have been suggesting.

Bill C-11 was introduced by the Minister of National Revenue and the Minister of Health, both of whom spoke today very well on the amendments that are being proposed to support this February 8 initiative. Those amendments to the Excise Act, the Customs Act and the Tobacco Sales to Young Persons Act are all important complements to that initiative announced by the Prime Minister on February 8.

The amendments will provide Canada's law enforcement agencies with additional legal powers to end smuggling. It protects the health of young Canadians by banning the production of cigarette packages of less than 20 cigarettes, which we have referred to as kiddie packs, and the sale of tobacco products to persons under the age of 18. In addition, this legislation will require that each individual cigarette must bear a distinctive marking indicating that the duty has been paid.

Smuggling is a criminal activity that hurts all law-abiding Canadians. As all members know, law and order in our society is a very important issue. We were told throughout the election campaign and we continue to be told that Canadians want our laws to be enforced. They remind our government that we have a duty and a responsibility to enforce law and order in Canada.

That is why we need these amendments. It is to provide our police forces with the additional tools and flexibility that they are going to need to crack down on smuggling.

Since the initiative of the Prime Minister on February 8 and as a result of all the dialogues that have gone on since that time, there have been a number of feedbacks from the community. I have a couple here of notable news to share with hon. members.

The Canadian Association of Chiefs of Police has welcomed the government's action plan. It says that by taking the profit out of sale, organized crime will quickly lose interest. We also note in the Montreal Gazette that it compliments the Prime Minister on his plan saying that the high tax, high price policy had been effective for a while in reducing smoking but it was no longer working. It was being gutted by something far uglier than legal, cheap tobacco, that is cheap tobacco from a large and violent criminal network.

There are some key messages that we have received from the Canadian public since the introduction of these plans. First, criminal law applies to every person in Canada and enforcement officers must and have been cracking down on smuggling wherever it occurs. Second, the new legislation will strengthen the ability of our police to enforce the law. Finally, the concerted federal-provincial action is the best way to crack down on smuggling.

As a member of the Standing Committee on Health I would be remiss not to address the health issue. There is no question. This morning one Reform Party member in representing his party's interest said that they agree with the legislation of Bill C-11, except for the reduction in the excise taxes. I liken that to a table with each leg representing one of the four points of the Prime Minister's plan. The hon. member suggests that taking away one of those legs would still make the table a stable foundation for the activity to occur on it.

The hon. member will agree that by not having the excise tax reduction in combination with the export tax which is being applied, we would not have eliminated the profit motive for smuggling. It was absolutely essential to make this gesture so that from a financial perspective we could break the back of smuggling and get a handle on this situation. Hopefully through that, as the Minister of Health has indicated, we can return to a process of making sure young people do not have the incentive to smoke simply because of the accessibility of cigarettes.

I should acknowledge that the Canadian Medical Association wrote to all members. It complimented the government on three parts of the program but had concerns regarding the reduction of the excise tax. It is supportive and I know it is in consultation with the government and the Minister of Health. I know it supports the government in spirit.

We must deal with this major problem so that Canada can enforce its laws. Then we can get back to the creation of jobs and economic growth in Canada.

[Supply, February 21st, 1994]

Mr. Speaker, I heard what the Reform members have been saying. I have been sitting here for hours listening to the debate. However when I look at the Order Paper I have to ask why these particular examples are there.

The first is with respect to serial killer cards. We know they have been discussed and that there have been petitions and members' statements. Members of the Reform Party must understand that the Minister of Justice stood in the House and said that they are working on it now. They are looking at the charter provisions to make sure that legislation can come through and be effective. That is being handled as a result of the petitioning process. We do not have to debate it any more. It is a very bad example.

The second is with respect to young offenders. This government was elected and one of its main planks was to reform the Young Offenders Act. Many people brought in petitions in that regard. Is it necessary to debate in the House what the government is already committed to doing?

[Supply, February 21st, 1994]

Mr. Speaker, let me be brief.

The question has come up whether a petition with a million signatures on it should be debated in the House. Maybe we should consider something like that. What if a petition came before the House with a million signatures saying that official bilingualism should be discontinued in Canada.

I believe there are questions the government could deal with without having to debate them. It is a matter of policy. Possibly the member could comment on this issue. If a petition comes forward for debate, if we follow what the Reform Party is suggesting, how would other members get prepared to debate that petition without themselves going back and somehow doing some sort of work to determine the position of their constituents? It is totally impractical. Maybe the member for Burin-St. George's could comment.

[Supply, February 21st, 1994]

Mr. Speaker, I congratulate the member on a very fine intervention in this debate on the opposition motion. His constituents would be very proud of the way he spoke. His speech was presented in a very informed and logical fashion. That is part of what Canadians are looking for in their members. It has to do with appearance and optics.

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One of the last points the member raised really goes to the heart of the issue. The hon. member said that members of Parliament should be representing the interests of Canadians. The member said Canadians. He did not say members of his own constituency. This is a very important point because we come here as members of Parliament to reflect the best interests of our constituents but in the context of Canada as a whole and of all Canadians. Some very important regional and local differences must be balances.

Thinking of the election campaign, there were 30,000 homes in my riding to be visited. I could not possibly get to all of them. There were over 67,000 voters. How could I possibly presume I would get to know them all and get to know exactly what they were thinking on every issue and be able to come here and represent that interest? I have no mechanism other than using my best efforts and presenting and availing myself to use my best judgment. That is what the Prime Minister has been saying.

I thank the member for raising the issue that we are here to represent Canadians. It is an important distinction which the opposition motion has not taken into account.

[Income Tax Act, February 14th, 1994]

Mr. Speaker, I congratulate the member on his intervention in this debate on Bill C-9. I want to add some clarification.

If I understood the member's statement correctly the GST revenue was somewhat less than $15 billion and after expenses it really contributed none.

In fact in terms of gross collections by the government the GST contributed some $29.5 billion. However, that was reduced by the $10.7 billion which the government paid in rebates, particularly to exporters because the input credits exceeded the taxes collected on their sales to non exports. That was further reduced by the rebates paid to schools, municipalities, et cetera which generally get about a 50 per cent refund of GST paid. Finally, there was a deduction of some $2.5 billion which was paid to low and middle income Canadians as a GST credit. Therefore, on a net basis after all those expenses the GST revenue to the government was $14.9 billion for the year ended March 31, 1993.

Having said all that we certainly do know the federal sales tax collected some $18 billion net. The GST has been a less efficient tax in terms of generating revenues for the government. Right now the finance committee has been working diligently looking into alternatives for replacing the GST to make sure there is efficiency and equity within our taxation system.

I raise those points for the member to ensure there is no misconception by Canadians on the present state of affairs.

[Income Tax Act, February 14th, 1994]

Mr. Speaker, I would like to ask the member to reconsider his position with regard to the capital gains exemption. As the member knows the $100,000 lifetime exemption did come in under a previous government two Parliaments ago.

There were two very serious flaws in regard to that exemption. First, it did not establish a V-day value for investments. Therefore anyone who had a holding gain prior to the introduction of that exemption got an automatic windfall. Second, it did not restrict the types of eligible investments under that exemption. Therefore investments in matters such as Florida vacation properties were eligible for an exemption. I have to ask the member whether he believes that kind of investment really benefits Canada.

One has to consider whether or not there is a logical stopping point. There is no question that some have benefited from this exemption and there is no question that others would like to. Where do we stop the process? There is no logical ending point.

The question therefore is if today we had no exemption would the hon. member consider introducing it as a measure which would benefit Canadians today? I think the answer is simply no.