Budget Implementation Bill, 2017, No. 1—Eighteenth Report of National Finance CommitteePublished on 20 June 2017 Hansard and Statements by Senator Jim Munson
Hon. Jim Munson:
Honourable senators, I like beer and a glass of wine. For those who play hockey, do you ever have that beer after a one-hour game? When you first started paying for it, it was $4 and then $6 and then $7. And now as you get older, you like these craft beers and put out $10. Now it’s $11 or $12, so you have to go back into your pocket.
This kind of tax grab, or getting after this money, has been around for some time. I’m sure that Finance Minister Flaherty had to beat back some of the people in the Finance Department. I know that former Prime Minister Jean Chrétien and Paul Martin had to do the same thing. There’s nothing better than grabbing the cash and not having to go through Parliament so that the planners of our finances can have money that they know will be there every year without even having to talk to parliamentarians.
That’s what we’re here for, to review and take a look at these things. That’s why I strongly support Senator Marshall’s work today in the Senate committee. It’s very important.
In the millennial generation, too, many young people are going out to buy beer or wine. And they’re going out to support local craft beer people in different small communities around the country and in the Ottawa area. They are a small beer industry, about four or five of them, and they are thriving. Guess what they do? They employ 30 to 60 people in their communities and they pay taxes. And they pay enough taxes.
I’d like to identify some of the concerns that have been put together by others on this escalator tax on beer, wine and spirits, and also dealing with the restaurant industry, which doesn’t like this at all.
The bill, as others have said, would impose an excise duty on beer that would continuously increase by the rate of inflation next year, starting next April. This escalator tax could lock Canada into guaranteed beer or wine tax increases each year without the need for the finance minister to table the increases in Parliament.
I think the important thing to remember is that Bill C-44 in this regard would therefore remove parliamentary oversight and release the government from the yearly accountability for beer tax increases.
In case you don’t know, Canada’s taxes on beer are already high. Canada’s excise rates on beer are the third highest in the world.
The proposed escalator would continuously impose automatic tax hikes on top of the existing high tax rates. Additionally, the excise tax is unable to take into account certain important factors, as has been mentioned, including the rate of inflation. Determining the use of the Consumer Price Index does not take into account what is going on in a specific industry. Canadian beer sales have actually decreased, while the Consumer Price Index continues to increase. The proposed excise tax cannot take this discrepancy into account.
Bill C-44 proposes to increase the tax on beer in perpetuity regardless of the state of Canada’s beer industry and of the Canadian economy. This would negatively impact the Canadian beer industry.
Furthermore, the escalator tax on beer is a regressive tax, which would have a greater impact on low income beer consumers than it would have on higher income consumers. As a result, the escalator tax would disproportionately affect low-income Canadians.
While the government has communicated that the intention of the escalator tax is to ensure the effectiveness of the excise tax as prices change over time, the inflexible nature of the escalator could have problematic consequences.
Parliament is fully capable of taking the rate of inflation into account for tax adjustments in future budget bills. That practice would maintain government accountability for each yearly tax increase.
So, honourable senators, like others here today, I ask you to consider that the beer or wine tax unnecessarily locks Canada into a fixed escalator that would dictate greater and greater taxes on beer and wine without proper government oversight and accountability for these increases. At the end of the day, it’s Parliament that is accountable for this, not officials in the Finance department.