Finance committee  That's fair to say.

Finance committee  The cigarette inventory tax is a technical, additional measure to the main measure to adjust the excise duty. In the Excise Act, 2001, we've had that specific mechanism for many years now. It is used when the excise duty is being adjusted. For instance, I think the last time it was as part of budget 2014.

Finance committee  The proposed excise duty rates apply equally to imports and domestic products subject to taxation. For instance, you do have some wine that is blended in Canada. These types of wine are blended from foreign and domestic products, meaning grapes. These wines are also subject to the increased excise duty according to the proposed measures.

Finance committee  Basically, this is how it works. You have an excise duty. This excise duty is imposed under the Excise Act, 2001, in respect of wine produced and packaged in Canada. An equivalent duty is imposed under the customs tariff when the wine is imported at the border. This application of the duty applies only once.

Finance committee  I would like to check that information. But what I can tell you is that there is probably nowhere in the world where there is federal taxation and a provincial distribution monopoly. That is very unique to Canada. I would be very cautious before making any generalization at all on federal excise duty in terms of any taxation rules used in unitary states.

Finance committee  To my knowledge, there has been no specific analysis done based on the presence of the escalator specifically. All the analysis was done as part of the overall proposed measure. As mentioned earlier in my presentation, a 2% increase that effectively resulted in about ¾ of a cent of additional excise revenues on a bottle of wine has not been deemed to potentially reduce any type of consumption or production patterns in Canada.

Finance committee  Thank you, Mr. Chair. I would like to add one tiny little technical detail. Mr. Deltell, you mentioned a comparison with a particular adjustment mechanism for the previous excise duties that existed at the beginning of the 1980s. I would like to add a clarification. The automatic inflation mechanism that is being put in place by the government here is based on the general consumer price index.

Finance committee  You're right in the sense that these are all political decisions, as the minister has the ability to propose to Parliament an automatic mechanism that makes those adjustments occur in the future. These are ultimately all political decisions.

Finance committee  With the revenues projected for future years, given the very small increases proposed, there was no adjustment factor based on a drop in consumption of alcoholic products in Canada.

Finance committee  There are a number of parts to your question. In terms of imported alcohol, excise duties generally apply in their entirety. What I mean by that is that a bottle of wine imported from France is going to be hit with excise duty at customs. For a 750 ml bottle, the customs duty will be about 47¢.

Finance committee  The intent of the measure is to recover today the sums we were obtaining through the surtax at the beginning of this century. I must tell you that there are companies that were still paying the surtax until recently, because they were still active in Canada. If those companies stop paying the surtax, but if the excise duty is increased, they could see their products sold for about the same price as in the current market.

Finance committee  Thank you for the question. In the first year, 2017-2018, the $30 million increase in revenue is the result of the immediate 2% increase in the excise duty. In subsequent years, for the excise duty to keep pace with inflation, the forecast is to increase it on April 1 in each of the following years.

Finance committee  Thank you, Mr. Chair. I'm here today to discuss the two proposed excise measures that were included in budget 2017 regarding tobacco and alcohol taxation, which are included in part 3 of the bill in front of you. The first measure deals with tobacco taxation. You will find it in the following clauses: clauses 45 to 48, clause 51,clause 54, clauses 58 to 63 and clause 66.