Orders of the Day – November 25, 2019.
Hon. M. Farnworth: In this chamber, I call committee stage on Bill 45, the Taxation Statutes Amendment Act, 2019. In Section A, the Douglas Fir Room, I call continued committee on Bill 41, Declaration on the Rights of Indigenous Peoples Act, 2019.
Committee of the Whole House
BILL 45 — TAXATION STATUTES
AMENDMENT ACT, 2019
The House in Committee of the Whole (Section B) on Bill 45; R. Chouhan in the chair.
The committee met at 2:42 p.m.
On section 1.
Hon. C. James: I just want to introduce the staff who are with me, before we get into the discussion on the committee stage. I have Richard Purnell, executive director, and Keith Preston, who is strategic advisor, both from the tax policy branch.
S. Bond: I appreciate the opportunity to start working our way through this bill. I’d like to begin with some general questions. We’ll ask them in section 1. They’re more overarching to the policy issues, but we’ll start with those. The minister has been very helpful in allowing us that in previous bills we’ve discussed.
This really goes to the sense of the definition of vaping devices and components. We want to be sure that the definition is broad enough to capture all of the parts. There are oils. There are accessories that go into vaping products.
Can the minister give us a sense of her comfort level, and perhaps be fairly explicit, about the components that are covered? We want to make sure it includes oils and accessories that go into vaping products. Can the minister give us a sense of her understanding of that definition?
Hon. C. James: Yes, this is a critical piece. I think, as the member has pointed out, it’s important, when we’re looking at vaping, to make sure it’s a broad-based definition. Really, we’re talking about, as the member can see, through this section, all products. We’re talking about all products that are related to the device as well as the products that are used in the device.
That would go as far as including chargers, for example, and cases. Like, we have been broad-based in the approach that’s here. It would include solid, liquid and gas products that are used in the vaping as well. It includes zero nicotine as well as nicotine. It includes both of those products, because I think, as the member knows and as we talked about in second reading, often those chemicals are mixed. It includes liquid cannabis, again, because cannabis is often mixed with other liquids which could cause health issues. So that’s included as well. The vaping devices, for example, will include the pens, the pod systems, the vaporizers, the hookahs and the electronic cigarettes.
We’ve made the definitions broad enough to include, exactly as the member has pointed out, the need to make sure that we’re capturing all of the vaping products.
S. Bond: Can the minister tell us, in the event that there is something that’s been missed…? I mean, it sounds like a fairly comprehensive list, and we’re appreciative of that — things like chargers, cases, all of those kinds of things. What remedy is there if there are other things that…? Having a broad-based definition is important. We don’t want a list in legislation, because it means we have to add to it or take away from it. So in the event that the minister discovers other things that haven’t been captured, how would that be rectified?
Hon. C. James: I think that this is an important point, because as was, again, discussed so well in second reading, marketers are very clever. They will look for opportunities to be able to go outside or to be able to find another product to be able to market to youth. So I think this is a really important piece. You will see in the section that there is the ability to add, in regulation, additional products that may come on the market that are similar — in other words, used for vaping. We have the ability to add those in as well.
S. Bond: Certainly, one of the things that I know…. I should point out that, obviously, we’ll have a number of my colleagues involved in the debate this afternoon. So we’ll try to signal where we’re headed ahead of time, to which person.
That is an important piece for the minister to reflect on. How will that be monitored moving forward? I think that one of the things we’re going to be looking for is effectiveness, monitoring, making sure we’re on top of this. Not just to introduce a bill, and then what? So how will there be an ongoing process to monitor, for example, to look at new products that might appear, people that are attempting to skirt? How will that be handled in the ministry? Who will be tasked with making sure they’re keeping track of products or the component parts that are reflected in the definition?
Hon. C. James: I think it’s a good example of work across government, just as we talked about in the ten-point plan that’s been put together on vaping. It’s important after the legislation, if the legislation goes through, and after the plan is developed that we continue to have that close connection between ministries.
Certainly, the revenue branch and the tax policy branch will be doing monitoring. But I think just as important will be the connections that our branches will have with the Ministry of Education and the Ministry of Health. We expect that if new products start appearing, it will be probably education…. It could be schools, it could be parents reporting to schools, it could be Ministry of Health, community health nurses, etc., who may first notice those kind of things. So a very close connection between all of those ministries and all of those parties and people in communities.
There’s also the opportunity for audits, as always happens and can happen as well. I expect the close connections between those ministries and between people on the ground will be the best opportunity to be able to spot if something tries to get around or is new on the market.
S. Bond: Just to pursue that a tiny bit further. Is there an ongoing working group, then, across ministries? It’s easy to have joint accountability, which typically means no accountability. Is there an ongoing, focused working group that, now that the bill has been announced and is being debated here today, that those ministries…? The minister is correct. There does need to be cross-ministry work with Health and Education. They all have key components.
This definition can’t simply be monitored by the people, from my perspective, in the Finance Ministry. So is there an ongoing, dedicated working group that is cross-ministry?
Hon. C. James: If the bill passes — we have to wait till the bill goes through the debate — certainly this is the beginning. I think, as the Minister of Health spoke to so well, as others did, in second reading, this is just starting. This ten-point plan is just being developed. Certainly, we’ll take the member’s suggestion into account. There are close contacts with the staff as well.
I think we’ll be looking at all of the options to be able to get the information. It’s critical for us, obviously, in the Ministry of Finance, but more importantly, it’s critical to the ten-point plan. This is one piece of the plan. The other pieces have to be integrated, and it has to be done together.
S. Bond: Thank you for that. I know that throughout the course of our discussion and committee questions, we’ll certainly be pressing for transparency and accountability. This is about a health issue. There are financial implications, obviously, and that’s why we’re here today. I thank the minister for those answers.
Let’s move on to subsection (d) for a moment. When we look at subsection (d), it appears to exclude vaping devices from the products that qualify for a “small seller” designation. Can the minister confirm that or give us a better explanation?
Hon. C. James: There is, within the tax rules, a small-seller rule. The small-seller rule means that if you have revenue that’s not more than $10,000 and you don’t have a business premises — so on line, eBay, where you’re selling things — you don’t have to collect the PST. This exempts vaping products from that small-seller rule. They will not be allowed to use that opportunity not to collect PST.
S. Bond: Rather than exempt or protect vaping products, this actually does the reverse? They will now be part of being held accountable for that, rather than the reverse.
Hon. C. James: Yes, that’s correct. It closes a loophole, basically.
S. Bond: Thanks. That’s a much more elegant way of saying it than I was coming up with.
Can the minister elaborate on how excluding…? When we look at…. Let’s ask it this way. Will all sellers and resellers of vaping products pay the 20 percent tax?
Hon. C. James: Yes, they will all be required to collect it.
S. Bond: How does that work if, for example, we look at things like Craigslist or other things? I’m sure the minister has had a discussion with her ministry about that. How is that going to work? How do we manage and control behaviour that’s, for example, on line and those kind of things? Let’s face it. The more that we focus on what traditional sellers are doing, there are going to be all kinds of creative ways that people are going to try to avoid the 20 percent tax.
Can the minister give us some sense of what discussion has taken place around things like Craigslist, something on Craigslist?
Hon. C. James: I think the first piece that’s important to note is that this issue isn’t unique to vaping. The issue of online sales, the issue of collecting PST is not unique. There is experience and a group in the tax branch already, a revenue branch that looks at exactly these kinds of things. There is a team responsible already — unfortunately, sadly, needed for these kinds of things.
I think, as we’ve talked about before in other bills, I won’t describe all of the things that the auditors do, because that would take away the point of having an audit and having an auditor go in. But they would be doing things like watching for ads. The team would be watching for ads on Craigslist or eBay or used-whatever, whichever community. That tracking could then give the opportunity for an audit to have to go in if they felt that there was something there. There is already a group responsible, and certainly, as I said, it’s not unique to vaping. This would now be included as part of their responsibilities.
S. Bond: Does the minister anticipate any issues with capacity? When you think about now adding vaping…. I’m going to go on to talk a little bit about tobacco in a moment. But are there issues within the ministry in terms of the capacity to now monitor vaping along with all of the other things that those auditors and the audit team look at?
Hon. C. James: Certainly, as we do each year, we take a look at sources. We look at staffing. We look at the need for support for every branch. We don’t, at this point, foresee anything, but again, this is new. This is early. So that would certainly be a discussion that would be important each and every year. It would be to look at the revenue branch and to look at staffing.
I think the other piece that’s important to note is that a lot of this work is also done through technology, and so there are, in fact, some efficiencies that happen with technology and being able to do audits and being able to do those kinds of searches. So there are opportunities there, but certainly, that’s something that we take a look at each and every year.
T. Stone: I’ll be weighing in here and there as we go through this committee stage. I appreciate the minister’s willingness to answer questions from a number of our colleagues.
Just on this question of capacity and audits and so forth, the Minister of Health, in introducing the anti-youth-vaping action plan, indicated that one of the critical components of the plan is to require retailers to identify themselves to self-register. The Minister of Health had indicated that while no one knows for sure how many retailers there are out there, estimates suggest that there could be up to 90,000 retailers in all forms all over British Columbia currently selling vape products.
Of course, part of the action plan was to require self-reporting. There are some time frames that the minister alluded to in his remarks in terms of how much time. I believe it was three months. There was going to be a three-month phase-in period, where the retailers, by regulation, would be required to register with their local health authority. I’m not sure if those regulations have been prepared yet or if the Minister of Finance is familiar with them.
But the question that relates to what we’re talking about here today, I think, would be this. Whether the number is 90,000 or 50,000, it’s a huge number. Granted, going forward as part of the vape action plan, there will be a sort of differentiation between vape shops, which have a 19-year-or-older requirement for entry. They will be allowed to sell a much more reduced array of flavoured vape products — presumably after the weeding out of kid-friendly flavours has taken place. Then everybody else, your corner convenience store, would only be able to sell tobacco-flavoured. Well, no flavours or tobacco flavour would be the only flavour, I think, that’s being contemplated.
Can the minister speak to what her sense is in terms of the timelines associated with the tax coming into place in January 1 and the requirement to begin paying the PST on sales, when there’s a three-month clock, which I’m not sure has even started ticking yet, in terms of retailers actually having to self-disclose that they’re actually selling vape products?
Hon. C. James: I think, as the member points out, there are two different processes here. There’s the tax process, which will happen January 1, and then there’s the registration or licensing or whatever process that the Ministry of Health will end up with at the end. The Ministry of Health is working on that piece, so I won’t jump into that. That’s their piece that they’re working on around that.
For us, on the tax system, the reason we’re able to move on January 1 is that, as the member would imagine, most of the sellers will be existing sellers of items that have a PST on them. They will be required to update their systems. This will give them enough time to be able to update their systems with the new price and the new tax on vaping. But most sellers would have an existing structure in place for PST
T. Stone: I appreciate that. I suspect that the minister is probably correct for the vast majority, but again, we don’t know whether we’re talking about 50,000 or 90,000. I would agree that the vast majority are probably reputable operators that have systems in place, because they sell other products beyond just vaping products. But there are a tremendous number of specialty stores, specialty operators, in the vaping market that really just sell vape juice, and they sell vape devices and other paraphernalia related to vaping.
Again, I just want to understand, from a timeline perspective. The tax kicks in on January 1. I understand how the PST works in terms of remittance and so forth. This reporting requirement where we’ll actually know how many — who’s actually selling what and in what volumes and so forth — is likely to come into place not perfectly in tandem with January 1 but shortly thereafter.
What confidence does the minister have that there won’t be a real challenge in a bunch of retailers getting caught between the two time frames, which will be potentially quite different? It might be different by a month; it might be different by a couple months. But this would require, I think, a fair bit of additional enforcement and audits and whatnot.
So I’m just trying to understand what thinking might be in place to best manage this transition process. It probably would be all sorted out within about a six-month period. But it might be a little bit bumpy in those first two or three months.
Hon. C. James: I think the piece that’s clearest is to, basically, look at the tax process, because that’s really where the Ministry of Finance is involved, which is to ensure that people are paying their correct rate of tax.
If this legislation goes through and if we move ahead with the 20 percent…. People now who are selling vaping products are collecting PST. They’re already collecting the 7 percent of PST. By January 1, if it goes through, they’ll have to start paying 20 percent.
We can begin our audits any time, because it’s already in place. They already know they have to collect it. They already will have the new rate. They’ll have notices. That information goes out, as any tax change when it happens, and people will have to collect it. Then we can begin the audits and we can begin the tracking.
Will that coordinate — I think, if I get the member’s direction they’re looking at — with the work that the Ministry of Health is doing around tracking to make sure that the right people are selling the right vaping products, because that will be the Ministry of Health’s responsibility? We expect that, yes, there will be an opportunity for us to look at that kind of work together. But in the meantime, we begin our process, because our process is focused on the tax and the tax rate, while the Ministry of Health is developing the rest of the plan.
T. Stone: Then, if I’m to understand correctly, the expectation here — I guess, the law — would be that the tax has changed from 7 to 20 percent, with respect to the sale of vape products. So anyone who’s actively engaged selling those products, whether they’re selling them currently at 7 percent or not, would be required to sell them at 20 percent, irrespective of the registration requirement that the Ministry of Health will be — through regulation, presumably, in the coming weeks — imposing on the sector? Is that correct?
Hon. C. James: Yeah. I think the member has described the process well. I think the other piece that overlays that, of course, is that once regulations are passed through the Ministry of Health, then they also have the requirement, of course, to follow that law as well. So it’s not simply that they get an opt out. They just get to pay their tax. They actually have to follow both laws, both the regulations that will be in place around selling and what they’re allowed to sell as well as the increase in the tax.
T. Stone: Then can the minister speak to what the enforcement plan or auditing plan may look like for even just this initial period? Is there a significant ramp-up contemplated, recognizing that the vast majority of operators are not known, necessarily, to be selling vape products at the present time?
What level of enforcement does the minister have in mind in terms of this initial period, when, as the Minister of Health has suggested separately, there could be upwards of 90,000 points of sale for vape products across British Columbia? Surely the minister would recognize that there’s an enforcement issue here that probably is more significant in the interim than it will be once things have smoothed out over time; once there has been this registration system put in place; and once we know who’s actually selling what, where, when and in what volumes.
Certainly, there must be some contemplation to a more short-term enforcement and audit plan, recognizing just the nebulousness, if that’s a word, of how many operators there actually are selling these products at the present time.
Hon. C. James: I think, just going back to the issue of collecting PST and the challenge of collecting PST or ensuring people are paying the correct PST on their products, as I mentioned earlier, there is a team already responsible in the revenue branch for that work. That team will be responsible, again, for the vaping. Because of the new rate, they’ll be responsible. There will be an audit team there so the team responsible can do the tracking.
As I mentioned, they already do this for other products to make sure if people are selling it on line, that there’s some kind of tracking there. Will it capture everyone who might be selling vape products who haven’t collected the PST or isn’t doing that? I don’t think there’s any system that would be 100 percent foolproof, but certainly, the tax department, as I said, has this experience.
Once the registration, the system or the structure that’s put in place through the Ministry of Health is in place, it gives us the opportunity then, obviously, to look at how, as I mentioned earlier, the coordination will happened between the ministries.
We think it will require Education, we think it will require Health, and we think it will require Finance together. They’ve had initial conversations, but as the process is developed through Health, they’ll be working closely with Finance. We can look at: are there information-sharing requirements that need to be in place? Do we need to ensure that we have that ability? Will that then help us be able to get to people who aren’t paying their PST that we weren’t aware of, that haven’t been claiming it — give us a chance to be able to do that follow-up? All that work is still to come.
T. Stone: My last question on this particular line of questioning, then, would be this. In light of the fact that estimates suggest that there could be 90,000 points of sale out there — the minister, I think, is acknowledging that there could be a little bit of extra work in the front end of this and that not everyone is necessarily going to self-identify or be identified as selling these products and, therefore, be captured by the PST tax on the sale of those products — has the Ministry of Finance increased the enforcement, the actual team that the minister just referred to, the men and women that work in that branch that do audits and enforcement? Has there actually been an increase in the number of positions in light of this particular file, this new tax, coming on line?
If so, how many additional FTEs are we talking about that will be engaged in enforcement? If there isn’t going to be an increase in the enforcement, as reflected through an increase in FTEs, then is it safe to presume that the focus of the existing team might shift from other areas of audits and enforcement, for a time being, to focus on at least the early days of what is a significant increase in the PST on vaping products?
Hon. C. James: As I mentioned, each year we go through that process within every ministry, and within the finance branch as well, to take a look at the audit team, to take a look at the workload, to take a look at what’s coming in. It is possible, once this structure is in place and once we have the ten-point plan up and running — and the tax branch does this very well because they’re used to doing this — that they will reallocate resources as they’re needed.
I think people will remember, certainly, through the first application process for people with the speculation tax, additional staff were put in place to be able to help in that. So if additional staff and a focus are needed at the beginning, that will certainly happen. But this is also part of the budget process — taking a look at what resources will be needed.
I think that some of that, particularly for the education program…. And again, the Minister of Health will have more to say about this as he creates and develops the plan further. You know, those are going to be ever changing, I would expect. I would expect that we’ll see resources going in. There will be other programs that want to be added. There’ll be other school districts, perhaps, or other communities that want to be expanded.
I think this is new, as the member knows, and we’ll ensure that the resources are there to make sure it’s a fulsome program. We don’t bring forward, and we haven’t brought forward, a plan to simply put a plan in place and leave it alone on the paper. I think everybody said that in second reading on all sides of the House — how critical it was to make this work and that this is simply one step. The work actually starts after we have announced it and after it’s been identified. The work then starts to really make sure that it’s implemented well and moves ahead.
I know I said this, as well, in second reading, but I think the other piece that is important is that this is not a big revenue source for government. These are resources coming in to help pay for some of the additional supports that are going to be needed, some of the additional health care costs that are already being paid for, some of the additional pressures that are there when it comes to vaping — the quit products, all of those kinds of things. So the dollars that are needed will be part of that process and part of that discussion and part of the intent of making sure we implement this well.
S. Bond: We talked earlier about the exemption when it comes to small sales and dealing with that from a vaping perspective.
Can the minister perhaps let us know how tobacco will be treated? Is there a change? Will it be treated in the same way that vaping is when it comes to small sellers?
Hon. C. James: There’s no change in the tobacco. The small sellers doesn’t apply now. They have their own piece of the act, and nothing changes with this.
S. Bond: Does the additional PST apply to tobacco-free vaping products — and if the minister can tell us why or why not that is the case?
Hon. C. James: Just to differentiate. If nicotine is in it or it’s nicotine-free, all of those will be taxed as part of the vaping piece. If it’s tobacco — actual tobacco, not tobacco flavouring — then it’s under the Tobacco Tax Act.
All vaping products, as I said, whether they’re nicotine or nicotine-free, are included, and we went through the broad list included under the tax.
T. Stone: I just had a few questions with respect to the definition here of “e-substance.” I understand…. I mean, it’s pretty clearly laid out in terms of it being defined as meaning “a solid, liquid or gas” and then: “(a) that is designed for use in an e-vaping device, (b) that, on being heated, produces a vapour, and (c) that may or may not contain nicotine, but does not include….” There are a few more words there. I’m curious as to why the definition, considering it includes “may or may not contain nicotine,” doesn’t also include reference to flavours.
It has been identified by everyone — from Health Canada to the Surgeon General in the United States to jurisdiction after jurisdiction across North America — that the inherent health risk associated with vaping really boils down to two areas. One is, indeed, nicotine. This is a part of the action plan that the Minister of Health launched, which I was calling for as well. And I really think the minister got it right in terms of the intense focus on controlling nicotine concentration levels. So I understand, therefore, why “may or may not contain nicotine” is specifically teased out in this definition.
But when everyone that I’ve just mentioned is also indicating in their next breath — no pun intended — that the flavouring that is very often contained in vape liquids is also increasingly proving to be of concern from a health perspective, why is there no contemplation of flavouring in this definition?
We know that the nicotine is what truly is addicting our youth who are getting hooked on this practice. But we know that the flavouring is often the entry point or the attractiveness — a big part of luring our youth into the practice in the first place.
Can the minister offer any thoughts as to why, again, nicotine would be contemplated here but there’s not any reference whatsoever to flavouring? The minister and I canvassed this in second reading. I think we’re all on the same page about the flavouring question, generally. Candy floss. I saw one yesterday — a crème brûlée flavour, which is ridiculous. But these are all intended to lure our youth into this dangerous, unhealthy practice.
Hon. C. James: I think the best place to start is that the beginning point for this definition is the existing Tobacco and Vapour Products Control Act. The first place that you start in looking at an act is to look at where a previous or another definition would be. The definition is already there in the Tobacco and Vapour Products Control Act. What we certainly felt, and any of the advice we received, is that e-substance, meaning a solid, liquid or gas…. It doesn’t mention flavouring. It doesn’t not mention flavouring. Therefore, it will include all of it.
It doesn’t define flavouring, which then someone might say they found another way of putting a flavour in. So from our perspective, we looked at the definition that was already there. It included the nicotine in the definition in the Tobacco and Vapour Products Control Act as well, which is why it’s here. But we were advised, and we felt, it was broad enough to include, as the other act does, flavoured products.
[J. Isaacs in the chair.]
T. Stone: Fair enough. I do recall, however, as part of the general consensus that we all arrived at insofar as the need to build upon a foundation of regulation that was there from, I believe, 2016, which I think we unanimously passed in this House…. The minister was here. I was here. We’ve all since recognized that much of that good, well-intentioned foundation that was in place three years ago isn’t currently meeting today’s circumstances. Today’s circumstances, in large part, relate to us finding ourselves in a place where we have tens of thousands of youth across the province who have been lured into this unhealthy practice, in large part because of flavouring.
Again, I hear the minister insofar as saying there was a definition that was there. I guess I just want to ask one more time here why we wouldn’t be defining, or including as part of this definition of an e-substance, the flavouring.
Often the vape juice contains nicotine. Often it doesn’t. Often there is a tremendous amount of vapour, by the way. I think, mark my words, we’re going to get caught on this in years ahead, because increasingly, the amount of vapour that’s being produced is getting less and less and less. They’re suggesting that there may not actually be much vapour produced in the not-too-distant future with where the technology is going. In fact, anything that is produced would just be absorbed completely inside of your body. So would that fit the definition of e-substance here?
Maybe there are two parts to that question. Again, one more time on the flavouring: why wouldn’t we have included some contemplation of flavouring here? Secondly, is the minister confident that this definition is going to stand the test of time over the next…? We know how quickly we’ve gone from A to Z just in the last 18 months, how dramatically the landscape has changed. Is she confident that this definition will be resilient enough to keep up with current trends in technology, particularly as related to vapour?
Hon. C. James: I think it’s an important discussion. But also, I think, as the member has pointed out in second reading, it was a main focus — and certainly, a main focus of the ten-point plan as well — around how to regulate and how to get the flavouring and the ability to get flavouring limited as much as possible — or eliminated, hopefully. I think all of us would like to get to that place.
I think the key, though, with this definition is to look at how we mirror the Ministry of Health Act, because we also don’t want someone to utilize those interpretations to use a loophole to find a way through. So I think because it is broad-based, talking about a solid, a liquid or a gas…. It doesn’t say whether it’s flavoured or not flavoured. Therefore, it’s inclusive — includes all of them.
The member raised the issue of a second piece, which talks about “on being heated, produces a vapour.” There’s an additional piece which says: “…capable of vaporizing an e-substance for inhalation or release into the air.” So that piece is, at least, taken care of. There’s at least a recognition that there may be a challenge around new products, as the member points out. So that piece is actually included in there as well.
Then I think the last piece is…. I don’t think anything is ever 100 percent. I think we’ve seen the technologies change so quickly that there’s always the opportunity for people to look for ways around. We’ve certainly seen that with tobacco and now vaping and their opportunity to target.
We continue to have the ability, through regulation, to be able to add. So there are opportunities through the e-devices. For example, if new devices come up, if there are new ways that they try and hide some of the products that the member is talking about, there are opportunities to add those in regulation as well. It’s more a matter of making sure that we don’t provide a loophole for people with a different definition in the Ministry of Health Act than is in here and recognizing that the Ministry of Health definition was broad enough, so it was inclusive, not exclusive.
S. Cadieux: A PST notice went out recently from government that stated cannabis e-juice — cannabis in a liquid form designed for use in a vaping device — is a vaping substance for this act. Can the minister confirm that cannabis oils, then, are not included and taxed as e-substances under section (b)?
Hon. C. James: I think there are two pieces here. It has to be liquid. That liquid could include oil, could have some oil. But the part 2 of that is it also has to be designed to be vaped. So those two pieces have to go together when it comes to cannabis. It’s not the product that includes cannabis. It has to be liquid and has to be designed to be vaped, in whatever way to be vaped. Then it would be taxed at the higher level.
S. Cadieux: Why did government choose to tax cannabis e-juice under this section?
Hon. C. James: Cannabis e-juice has the same kind of risks as any kind of e-juice does. As has been pointed out so well by everyone who took part in this debate, no one really knows the substances found in e-juice, which are added in addition to cannabis or any other products they might be using. The glycerine— vegetable glycerine, propylene glycerine, all of those. There is more and more research that’s pointing out that that may be part of the harmful product that people are vaping.
From the perspective of looking at harm and looking at young people, we felt it was important to be consistent about the vaping products and the challenges of vaping products for our youth.
S. Cadieux: Did the Minister of Health then advise that cannabis e-juices should be included in the taxation regime?
Hon. C. James: Discussions happened with all ministers across government.
S. Cadieux: The minister has previously stated the projected revenue overall for the tax measure, but how much of it is expected to come from cannabis sales?
Hon. C. James: We haven’t broken it down. We expect it to be negligible, when it comes to the amount. As the member will know, there’s not a lot of money coming in right now on the issue of cannabis and on PST. So we don’t expect that that’s going to be a huge piece of the revenue on this piece as well.
But I do think it’s important to note that this isn’t a tax on cannabis; this is a tax on vaping. It’s a tax on the juice, the liquids that are used for vaping. Some of those include cannabis. Some of them don’t. So this isn’t a cannabis tax. This is a tax on vaping products and all of the paraphernalia used for vaping.
S. Cadieux: Following up on that exactly, through June of 2019, B.C. only sold $19½ million worth of legal cannabis, according to Stats Canada, and that’s on all the products. At a 7½ percent provincial tax rate, that would suggest that B.C. gained just around $1.5 million in revenue off those sales. Can the minister confirm what the total cannabis revenues were for fiscal 2018?
Hon. C. James: We can get the number around the federal excise tax and what the total was for the year to you.
S. Cadieux: I guess I’m just struggling with this a little bit. If the cannabis revenues have been so small and the sales have been so slow in comparison to the rest of the country, there is a lot of commentary that part of the reason for that is the way British Columbia chose to roll out its legal cannabis process or program. But it’s also about the taxation and the cost differential between the black market and the legal market.
Is the minister concerned at all about pushing more of the market to the black market with an increase in tax to 20 percent on vape products that contain cannabis?
Hon. C. James: Two different conversations here. I know the member will look forward to having those conversations with the Solicitor General and the Attorney General, who are responsible for the process of licensing, so I’ll leave that one to them, to discussions that I’m sure will occur.
On the issue of vaping, I think the really important piece here is that this really is a strategy. It’s not a revenue strategy. It’s a strategy to be able to discourage vaping, particularly by our youth. I think we all know that price point is…. Youth are price sensitive. Ensuring products reach that point…. I think the member raises a very important point around: what number do you pick, and what pushes people to the black market and what keeps them in?
We did some work around that to look at where we could start that would be important. For example, if the cannabis vaping liquids were exempt and only received the 7 percent sales tax, that, from my perspective, would not be sending a positive message to youth about vaping. You can buy a cheaper product because it has cannabis in it than you can buy the other products. I think having consistency across vaping products is very important when you’re sending a message to youth about not wanting them to vape and making sure that we keep the products out of their hands.
As the member will know well, you can’t tell what kind of product is being vaped when somebody is vaping it. So again, youth and use of cannabis at school— youth period using cannabis — has all kinds of health implications as well. From our perspective, looking at it from a vaping health issue and trying to keep it out of the hands of our youth in particular, it just seems that consistency is critical to being able to ensure that.
S. Bond: Speaking of the black market, we want to ask a few questions about that and the implications of the taxation process that’s been put in place here. Can the minister tell us whether she took a look at…? The minister said she and her staff have had a look at the black market implications. Can she tell us what her thoughts are related to the black market for cannabis products and whether or not it is more prolific? Did any of the work that the minister looked at demonstrate that it’s more prolific than the black market for tobacco?
Hon. C. James: I think two very different products; two very different histories with those products, which I think is important.
I think the risk is the same, which is why I certainly raised the black market. I think, again, we talked about it in second reading. The risk of moving things to the black market, I think, is similar. But tobacco we have a long history with. We have a long history of watching what happens with tobacco. It’s an extremely regulated industry compared to vaping, which has very little regulations.
I expect the regulations and the discussion that occurred through the ten-point plan and the Minister of Health will have an impact, no question, and also will need to be looked at and will need to be studied. But certainly when we took a look — and we looked at the research out there — there’s an example in the British Medical Journal. They have a journal of Tobacco Control.
They did a study around price point and how you can discourage behaviour with price point. Their study talked about how a 10 percent price increase should be able to reduce demand by 12 to 19 percent. That was an interesting piece to take a look at. Some of that certainly informed our view around product and pricing and how you can increase the price and reduce the demand. So that’s one of the tools that we looked at when we looked at raising from 7 percent up to 20 percent. It was, as I said, the research.
But there’s not a lot out there on vaping. Vaping is a new product, as we’ve talked about. It’s an ever-changing product, both by technology as well as the push to try and include young people. So we felt it was a reasonable approach to increase it by the amount that we have — not enough to push it into the market, but something we’re going to have to watch carefully, something we’re going to have to pay attention to.
If changes need to be made, I know this House will be interested in having that discussion as well, because I think that everybody, as I said, in this House wants to ensure we get youth away from vaping products. If we start seeing a positive direction, there may need be to changes to increase that positive direction as well.
S. Bond: I do think we appreciate the fact that the minister and the staff have taken some time to look at black market implications, because they are significant. The Royal Bank of Canada estimates that only 12 percent of cannabis sales in Canada are legal. Think about that. That means that 88 percent of cannabis sales go to the black market.
Can the minister give us an estimate of the black market for tobacco?
Hon. C. James: I can get that information. We don’t have it with us, but we’ll make sure we get it back to the member.
S. Bond: Thank you for that. I appreciate that. The issue is really that the robustness of the black market for cannabis is significantly different than the black market for tobacco. I guess the question, then, emerges as to why the minister is treating two different products and markets basically in the same way.
Hon. C. James: Perhaps some clarification around the issue. We’ve been talking about cannabis and the legal and illegal market. We’ve been talking about tobacco and vaping. We’ll get the specific numbers to the member around illegal sales of tobacco, but we expect it’s probably the reverse of what you’re seeing with cannabis. Again, because of the long history of tobacco, because of the regulation in tobacco, you’re probably seeing the reverse. Where the member used the 12 percent of sales legally, it’s probably the reverse when it comes to tobacco.
I think, again, if we’re talking about cannabis products in vaping, it’s important to remember that we’re simply talking about the vaping products that have cannabis or don’t have cannabis in them, not cannabis itself.
Just to clarify for the member, was the member talking about the issue of taxing tobacco and the issue of taxing vaping being a same kind of approach?
S. Bond: Yes.
Hon. C. James: Thank you to the member for that clarification. I think the issue of price point is the same in both products, so that’s really the basis that we’re bringing this forward on — that it has been shown that price point makes a difference. B.C. is the example of continued efforts, not simply….
Again, I think it’s important to remember that this tax work is one part of the ten-point plan. Just as for the tobacco industry, taxation was a huge piece in getting people to quit smoking, but it was also the products. It was also the advertising. It was also the laws put in place around where people could smoke and couldn’t. I think it’s important to remember this is simply one piece.
But the price point is the same. Whether we’re talking about vaping or whether we’re talking about tobacco, that price sensitivity is there, particularly for youth. Increasing the cost makes it more difficult for people to be able to access it. That’s why we’re utilizing the same kind of process to be able to address the vaping piece.
The tax is not near as high as it would be if we were matching tobacco, an increase in tobacco tax or increase in tax on vaping. Tobacco is much higher taxed. That’s why I say that we’ll have to watch it. We’ll have to watch it and see whether it’s having an impact, whether we can define how much of an impact is coming here, how much of an impact is coming from the other points in the plan, and make adjustments as needed.
S. Bond: I think there is general agreement about price point likely impacts behaviour, when the minister talked about price point having an impact on whatever product the person is choosing to use.
Was there any variation or differentiation that made it less likely that the price point would impact a person, whether it was tobacco vaping or whether it’s cannabis? Was there any sense of…? Did the minister look at: is the price sensitivity different in various categories, or is the ministry simply working on the principle that if you tax it more, there will be a behavioural change?
Hon. C. James: I think that there is very limited vaping economics, as they call it, that’s out there, but there is some research, as I talked about, around price point. One of the things that is clear is that youth are more price-sensitive than adults. That’s clear market research that’s out there.
Certainly, again, if we’re looking at the work we’re doing on vaping, this isn’t about revenue. This is about making sure that we do what we can to stop vaping, particularly in youth, who are highest at risk. Therefore, the price sensitivity was part of what we were utilizing as we looked at what we’re setting the rate at.
S. Bond: Thanks for that answer, Minister. If we look at Stats Canada sales data that was referred to earlier — in 2018, we’re talking about — if the legal market is only 12 percent of sales in Canada, then if you were to calculate, the black market must have been worth roughly $143 million in the reported October-to-June period, so losing roughly $10 million in tax revenue.
Can the minister tell us whether her data estimates the tax losses from sales occurring in the black market?
Hon. C. James: Revenue, obviously, we calculate based on what we can generate, not what we might have lost. It wouldn’t apply, in fact, simply to these products. It would, in fact, apply across the board. Part of the work we’re doing around money laundering and other areas is to try and get at that, to try and get at revenue that could provide resources back to government, but that’s not a calculation we would use in our budget or in our calculations. We use the money that we can generate.
S. Bond: The chair of the drug advisory committee of the Canadian Association of Chiefs of Police, Mike Serr, has said this: “If there is a strong, vibrant dark market out there selling illegal drugs, people will go to that, and we need to direct them to the legal market.” That was in October of 2019.
I’m wondering how the minister would react to the suggestion of tripling the PST on cannabis direct sales. How does that impact people and look at directing them to the legal market?
Hon. C. James: I think the important piece, again, that I’ll emphasize is that this is not a tax on cannabis. We’re not talking about a tax on cannabis. We’re talking about a tax on vaping products, whether they include cannabis or don’t include cannabis. We have to be very clear about that: this is not a tax on cannabis.
S. Bond: If the black market for cannabis is significantly more vibrant than the one for tobacco, is the minister not concerned that it will be easier for people to turn to unregulated, illegal cannabis vaping products?
Hon. C. James: I understand. I recognize that the member wants to have a debate about the cannabis issue and the issue of cannabis and black market and getting more market in legally. I think you would not get disagreement from anybody on this side of the House, including the ministers responsible, that we want to see the market be legal. There are steps that are being taken, and that’s a debate for other ministers and other days.
What we are talking about are vaping products. A very small part of the vaping industry is related to liquids that include cannabis — again, to have a differentiation between liquids that include cannabis and that do not include cannabis. From a youth’s perspective, providing the opportunity for people to be able to access a product that includes cannabis, because it has a lower tax, would be reverse encouragement for people to utilize the vaping products that had cannabis and not the ones that didn’t.
Again, I recognize that the discussion is a bigger discussion to have, but this is talking about vaping products and keeping vaping products out of the hands of youth, as part of a ten-point plan.
S. Cadieux: I appreciate the minister’s desire here to stem the growth of the vaping market and put in place some mechanisms — any and all mechanisms, I think — by which we can do that. I think both sides of the House are in complete agreement on that. What we’re trying to get at through this line of questioning is whether or not government did the necessary policy work around two very different products that, when treated the same from a tax perspective, could have two very different policy outcomes.
At the minister’s press conference earlier, announcing these tax measures, it was stated very clearly that nicotine was the health threat, not cannabis. So what are the health reasons behind tripling the tax on cannabis? Or was there just a large oversight at the press conference?
Hon. C. James: I will continue to correct the member. We are not taxing cannabis. We are taxing vaping products, including vaping products that have cannabis in them. Cannabis e-juice is not without health risks. The member asked about the health risks. Cannabis is not without health risks. In fact, it includes many of the products that are found in e-juice, which are also a risk and are being pointed out to be more of a risk than some of the other products.
Whether we’re talking about the liquids that are used to add the product in there…. On the health side, we wanted to ensure that the risks of vaping were taken into account. That includes all vaping products, which includes vaping products that may contain cannabis.
S. Cadieux: Well, reports on the risks of vaping definitely have shown that one of the major risk factors has been people using black-market cannabis vaping juices and that it contains dangerous by-products. They include cannabis, and they include other things that have been mixed with it for this purpose. In the U.S., NBC News lab tests suggested that with knock-off marijuana vapes they found pesticides linked to hydrogen cyanide in ten out of ten products. Of course, nobody wants anyone using that, least of all children.
At this stage, with a tax coming into effect mere weeks before the official launch of regulated, securely managed and sold cannabis vaping juice, has the minister factored in the timing of this tax with the risk associated with increased cost pushing yet more users into the black market, especially given that of the users of cannabis products, legal and illegal, about 20 percent report using cannabis vapes as their preferred mechanism?
We already know it’s a large portion of the illegal market. Would we not want to, at minimum, be moving them to the legal, regulated market rather than pushing it further underground?
Hon. C. James: We’re talking here about vaping, and we’re talking about taxing vaping. The issue of the illegal market for vaping is exactly the reason that we looked at the research that I talked about to the previous member, where we talked about the study that was looked at to look at how you decrease demand, how you discourage people from vaping and how we find that balance.
There is no question. I believe this balance will have to be looked at over the next number of years, just the same way the bill was passed in this Legislature around vaping, presuming that it was going to be fine, and it wasn’t. It had to come back for discussion and for this ten-point plan, because the times changed. The research changed. The science changed. I believe we will be looking at, just as we’ve done with tobacco: is it time for an increase? Is it time to look at the black market? How do we look at balancing that off? I think this will be exactly the same kind of process that will have to happen over the next number of years.
We do believe — based on the research that’s out there around price and on changing behaviour — that we have found that spot that will provide the balance of discouraging youth, in particular, but everyone, from utilizing vaping and not push the black market out. But again, it will have to be monitored. This is a relatively new market. It will have to be monitored, and we’ll have to pay attention to it and make changes in a way that’s going to meet the goals that we all have, which is: how do we discourage vaping in British Columbia, particularly amongst our youth?
S. Cadieux: What analysis was done by the ministry related to this particular tax, adding a significant amount of tax to the e-cannabis juice, in comparison to other jurisdictions? Our closest neighbours, like Alberta, whose legal market has been much larger and has grown much quicker than ours, and Washington state…. Our two closest neighbours — how are their vape tax regimes compared to British Columbia? Are we likely to see people access those markets to be able to access this product?
Hon. C. James: Alberta has just simply announced their change. They haven’t implemented it yet. We would be one of the first jurisdictions to actually have an increased tax and a taxation rate on vaping.
T. Stone: I just wanted to ask one question for my clarification on this particular piece of the committee stage debate here. Surely, the minister can agree that taxes on tobacco, if set at the right level…. They tend to go up marginally year after year or at least every other year. There’s analysis done that ensures there is that right tipping point where the taxes are not increased so dramatically, so fast, as to drive people to purchase their tobacco in the black market. If the taxes are increased just incrementally, as they typically are, the tobacco taxes tend to be a significant strategy that has been proven to be successful in getting people to quit smoking.
With respect to the taxes on cannabis products, the reason we’re trying to be so thorough in our questioning here in the context of tax changes that are about the vapour market, of which…. Cannabis products are increasingly being included in vape juice. I think we know the minister acknowledges that, or there wouldn’t be any contemplation of capturing cannabis in this legislation and in this tax increase.
But when it comes to cannabis taxes, I think the number one concern that we’re certainly trying to reflect that we’re hearing and that you certainly see pre-eminent in every debate and every jurisdiction around North America — well, across Canada, certainly, but I think also in U.S. states where there has been legalization of cannabis products — is if that tax is a burden, if the tax expectation is set too high on cannabis products, the result, generally, that has been demonstrated in other jurisdictions has been that it has driven people to not quit their consumption of cannabis but, rather, to pursue the purchase of cannabis products in the black market.
Further, with respect to the entire production chain, the entire regulatory scheme that has been established in the Canadian context and, in part, here in British Columbia with respect to cannabis retail, the entire production scheme, the entire regulatory scheme, has been designed to keep these products out of the hands of our youth. So it’s not like our kids, our youth, are, at a point of sale, distinguishing between a juice product that has nicotine in it or not or cannabis in it or not.
Again, I just want to try one last time to understand what analysis has been done here to suggest that incorporating, in the context of a tax change, a PST increase on vapour products…. What analysis was done that satisfies the minister that including in this tax, this PST increase, the sale of vapour products — that include cannabis even for medicinal purposes, I would point out…? Is she satisfied that that analysis she has looked at has told her that we are not going to see a corresponding increase in people simply moving even more to the black market for cannabis purchase, cannabis sales, than we have already seen as the government has rolled out their broader retail environment for cannabis sales here in British Columbia?
The two are very much linked, Minister. The vapour world and the cannabis world have intersected here. There is no doubt that cannabis-infused vapour products, the juice, are expected to be one of the fastest-growing segments of the vapour products market.
We think this discussion is very relevant at this particular juncture and hope that the minister can shed a bit more light than perhaps she has to this point on what has led her to be satisfied that the analysis she has seen would suggest that applying this 20 percent PST to the sale of cannabis-infused vapour products is not going to drive people, particularly our youth, to obtain these products, increasingly so, on the black market.
Hon. C. James: Just to, I think, come back to the policy, the reason we’re here having this discussion. We’re here having this discussion because all members — certainly, that’s what I heard in the second reading — in this House want to do what we can to discourage vaping, particularly youth vaping. That’s the reason that we’re having this discussion. It’s the reason the Minister of Health brought forward such a thorough bill. It’s the reason we’re looking at a ten-point plan, with taxation being one of those points.
We know, based on the research, that price point makes a difference, that increasing prices will discourage behaviour, particularly for youth. Youth are particularly sensitive to this. A 10 percent increase in prices can reduce demand 12 to 19 percent, based on the research information that’s there. We are increasing by 13 percent. Let’s remember there’s already a 7 percent tax on the products.
No changes on all other cannabis products. There is no change on any other cannabis product. But if we are looking at vaping products, to exclude products that have cannabis in them doesn’t follow the policy direction of doing everything we can to discourage youth, in particular, from vaping.
The member asked whether I feel comfortable and confident in the research that was done and in the work that was done. Yes, I do. I feel that we found that price point. I do believe it’s going to have to continue to be monitored. I do believe it’s going to have to continue to be watched, just as I know the Solicitor General and the Attorney General are doing their work around the legalization and ensuring they get more of the black market of cannabis ended and people moved into the legal market.
I think we will have to continue to monitor this to see whether the policy direction that we all believe in, which is discouraging youth, really occurs.
S. Cadieux: As a part of this, then, what’s the average price of a tobacco-based vape product and the average price of a cannabis-based vape product?
Hon. C. James: I think this is exactly the continued information that will be helpful to everybody, as we go through this.
We’re presuming that vaping products with cannabis would be more expensive than the tobacco or added flavours, but again, that’s going to vary. That’s going to vary out there, depending on the product, depending on the store, depending on the sales that are out there.
S. Cadieux: While I am 100 percent behind doing what we can to keep vaping products out of the hands of youth, the reality is that the vast majority of youth using products are not getting them legally. They are using them from the black market. I mean, they can’t even legally buy them until they’re 19. When we’re talking about kids in high school, we’re talking about kids who are getting products through the black market, one way or another. Whether they were legally purchased first, the secondary purchase is a black market purchase.
We are relatively…. You know, the minister can cite some relative comfort with the issues around taxation and price point increases and the elasticity of demand and the push to the black market with tobacco products but with absolutely no sense of what that would be for cannabis products, with a legal market in its complete infancy in British Columbia, especially given the botched rollout that we’ve seen. The reality is that we have a thriving black market for cannabis products in British Columbia.
I would think that we would want to be doing everything we can to ensure that we keep the price point on the cannabis products as low as possible to move people from the black market to the legal market at a minimum, where we know the products are regulated, where we know that government, be it through Health Canada or be it through the provincial government’s distribution and supply processes, is and has the ability to monitor the content of the products being sold and who they’re sold to.
At this point, I’m going to move an amendment to this section and suggest that this section be amended.
[SECTION 1 (b) be amended by deleting the text shown as struck out:
(b) by adding the following definitions:
“e-substance” means a solid, liquid or gas
(a) that is designed for use in an e-vaping device,
(b) that, on being heated, produces a vapour, and
(c) that may or may not contain nicotine,
but does not include cannabis within the meaning of the Cannabis Control and Licensing Act
other than cannabis that is in liquid form; ,]
Hon. C. James: This is the first we’ve seen of this amendment, so can I suggest we take a ten-minute recess?
The Chair: Absolutely. The House is in recess for ten minutes.
The committee recessed from 4:30 p.m. to 4:47 p.m.
[R. Chouhan in the chair.]
On the amendment.
Hon. C. James: I’m speaking against the amendment that’s in front of us. While I appreciate the discussion around how we encourage more legalization of cannabis and how we ensure there’s less of a black market for cannabis…. It’s something that I certainly strongly agree with and think we have to do everything we can, and I’m sure the Solicitor General and the Attorney General would have lots of conversation about steps that could be taken. I don’t believe that making a change on the e-juice — the vaping products that include cannabis — is going to help in that regard.
Because it would require two completely different systems for businesses, it could, in fact, jeopardize the January 1 date because of the requirement of the systems. Many vaping products are, in fact, sold in packages, and we would, in fact, again, have to create two different tax systems, because you’d be talking about one system with 7 percent and one system with 20 percent. So it certainly would be a huge challenge for many of the businesses that we’re talking about and would create difficulties.
It also could potentially create a huge loophole. How much cannabis in vaping liquid? How much do you think you would require to be able to only charge 7 percent versus 20 percent? What opportunity would that provide for…? We’ve talked a lot in this House, during second reading in particular, about how the marketers are very clever at being able to market to children, very clever at being able to change their products. This could, in fact, provide an opportunity for marketers to say: “We have a couple of drops of cannabis in this vaping product. Therefore, it’s only 7 percent now. It doesn’t cost 20 percent.”
I appreciate the sentiment around discouraging the black market. I appreciate the direction about doing that. I don’t believe that the amendment does that.
S. Cadieux: Just a clarification, please. I understand the minister’s position. But the minister said a couple things there that I question. First, the minister suggested that this could set up a difficult situation for people having two systems. I don’t believe that cannabis products of any kind can be sold in the same locations as tobacco products. Am I incorrect on that?
Hon. C. James: Maybe the member can clarify. What I’m talking about are two different products. Through the amendment that the member has put forward, we would have products with cannabis in them that would be charged at the 7 percent rate. We would have products not with cannabis in them at the 20 percent rate, which creates, then, a challenge and an additional piece for the business people to have to look at, whether they’re talking about packaging or whether they’re talking about the combining of the products that they have. You’d have two different products with two different prices.
Amendment negatived on division.
S. Cadieux: Well, moving on. Now, cannabis is currently prescribed medically. Can the minister confirm that medical cannabis will be taxed, if it’s under this section, if it is in liquid form?
Hon. C. James: We’ve talked about…. It has to have two pieces. It has to have the cannabis, but it also has to be produced for vaping in order for it to be taxed under the higher rate. So other medical products obviously wouldn’t, but if it was a product that was used for a vaping machine, yes, it will be taxed.
S. Cadieux: The minister is content to tax prescription cannabis if it is in the vaping form?
Hon. C. James: If someone has the medical authorization to use cannabis through their medical authorization, they have the ability to use any product. That’s the ability that’s there for them.
S. Cadieux: So the minister is saying that if that patient who has a prescription for medical cannabis prefers or, for some reason, needs to use that in a vape form, they will be taxed at 20 percent?
Hon. C. James: Yes, 20 percent will apply to vaping products, including those that include cannabis.
S. Cadieux: Can the minister tell us what prescription medications are currently taxed under the Provincial Sales Tax Act?
Hon. C. James: Prescription drugs are tax-exempt, as the member knows.
S. Cadieux: Are there any circumstances where there are prescription drug options, where someone might choose one drug over another, where one is taxed at a different rate than the other?
Hon. C. James: The member heard my answer previously, which is that prescription drugs are exempt.
S. Cadieux: If prescription medications are PST-exempt, then why are we now tripling taxes on prescription cannabis?
Hon. C. James: People have medical authorization to utilize cannabis. They have the choice of a variety of products to utilize to be able to fill that prescription.
S. Cadieux: So the minister’s rationale for tripling a sales tax on a cannabis product being used for medical purposes is: “Well, it doesn’t matter, because there are other products you could choose.” Is that correct?
Hon. C. James: I’ve answered that question.
S. Cadieux: However, this is treating a prescription product, a product for which an individual has a medical authorization, a prescription, differently from all other prescription drugs in the province. Is that correct?
Hon. C. James: I think we’ve canvassed this. Again, if it is a product that is utilized for vaping that includes cannabis, it will be taxed at the new rate.
S. Cadieux: Does the minister hold any concerns that those using medical cannabis e-juices may switch to smoking dry cannabis instead? And are there any health concerns with smoking dry cannabis?
Hon. C. James: An individual who wishes to vaporize the dry cannabis rather than smoking it is perfectly able to do that. These are vaping juices that we are talking about, used for vaping. They’ve been juices that include cannabis. But an ability to be able to vape continues to be there for people who use cannabis.
S. Cadieux: The minister then assumes that any individual who wishes to vape would prefer to use or would be comfortable using another product. Perhaps they don’t. What if that individual is particularly used to or comfortable with a particular product — currently using a cannabis e-juice — and that instead of paying the additional 20 percent, they will just continue to use that product by buying it on the black market. Does that concern the minister?
Hon. C. James: We have gone through the black market issue. I am very concerned about the black market, whether we’re talking about this product or any other product, including tobacco. I believe we’ve found that balance.
S. Cadieux: Not only do medical cannabis patients generally pay for their medicine out of pocket, but they’re subject to an excise tax, GST and PST. Does the minister not think that this tax increase counteracts the goals for affordable PharmaCare?
Hon. C. James: I believe we’ve found the balance in discouraging youth and discouraging people from a very dangerous product in vaping.
S. Cadieux: Can the minister respond to concerns that applying an additional PST on medical cannabis vaping products may force some patients to either smoke their medical cannabis or purchase cheaper, unregulated vaping products without the ongoing supervision of a medical practitioner?
Hon. C. James: I’ve answered that question. I’ve already spoken about the fact that you can continue to vape without using vaping juice. That includes cannabis.
S. Cadieux: The Select Standing Committee on Finance and Government Services unanimously supported an exemption from PST on medical cannabis. How does the minister then justify tripling the PST against that recommendation?
Hon. C. James: I’ve spoken about the balance.
S. Cadieux: The Canadian Nurses Association and the Nurse Practitioners of B.C. have called for the removal of PST on medical cannabis, saying that medical cannabis, authorized by a health professional, like other prescription medications, should be exempt from PST. How does the minister respond to the nurses as it relates to those people who choose to use their medical cannabis through an e-cannabis solution?
Hon. C. James: Already discussed. Thank you, Member.
S. Cadieux: Well, we’re going to continue. The Arthritis Society, the Canadian AIDS Society, the Canadians for Fair Access to Medical Marijuana all say that patients who access medical cannabis to manage their health conditions should be treated consistently with other patients who access pharmaceuticals to manage their illnesses.
Many British Columbians, including seniors and veterans, only turn to cannabis after all other traditional pharmaceutical options have been exhausted, and applying PST to medical cannabis is inconsistent with the taxation of other prescription drugs and supplements in British Columbia, which are PST-exempt.
Would the minister respond the same way to those organizations, given the understanding that at this point in time, when people get to the point in their life where they are choosing medical cannabis as an option to manage pain or their other chronic health conditions, that perhaps, in some cases, the vaping option is the best delivery option for that patient? Is the minister suggesting the minister knows best as to their medical needs?
Hon. C. James: Asked and answered.
S. Cadieux: The B.C. Chamber of Commerce also recommends the removal of PST on medical cannabis. Can the minister tell the chamber why she’s tripling the tax instead?
Hon. C. James: Thank you very much, Member. We are talking about the tax on vaping products that may include cannabis, not medical cannabis.
S. Cadieux: The minister continues to suggest that this is not about taxing cannabis, and yet it is, because cannabis e-juice is a cannabis product. It is a product that will be sold through the cannabis retail outlets set up and delivered by the province. In doing so, the minister has decided to arbitrarily triple a tax, adding 13 cents to what is already a significantly high rate of taxation on a product that is, in many, many cases in this province, being used for medical purposes under prescription by a medical professional.
Can the minister explain, again, with no data…. We understand that vape products are potentially harmful. We know that we want to try and keep them out of the hands of minors. There’s no argument. And we know that the data, the research that is showing, is showing that the majority of the products that contain…. Where the challenge appears to be is largely in the black market, which we are trying to minimize.
Yet the minister is now adding a tax to a product that is used for medical purposes and that, by all accounts, should not be taxed in this way, the way that regular prescriptions are. Where medical cannabis is being used for prescriptive purposes, why is it not treated the same way as any other prescription medication, all of which come with side effects and risks that are monitored and managed by government through Health Canada?
Clearly, the minister is not going to give me a different answer here. But at this moment, again, with that in mind, and with the fact that there are patients, many patients, who find that a particular method of receiving their medical cannabis works for them, for their pain management or for their appetite inducement or what have you, I’m not prepared to tell them that their choice of medical product is not legitimate.
So with that, I would move a second amendment. This time I would move that we amend section 1(b) by adding the underlined text as shown, adding the following definitions:
[SECTION 1 (b) be amended by deleting the text shown as struck out:
(b) by adding the following definitions:
“e-substance” means a solid, liquid or gas
(a) that is designed for use in an e-vaping device,
(b) that, on being heated, produces a vapour, and
(c) that may or may not contain nicotine,
but does not include cannabis within the meaning of the Cannabis Control and Licensing Act other than cannabis that is in liquid form and is not medical cannabis; ,]
On the amendment.
Hon. C. James: I’m speaking against the amendment. This amendment, in fact, is even more complex than the previous amendment, and certainly, we’ve had no opportunity to look at it. But there’s not a definition in the PST Act on medical cannabis. That doesn’t exist, so how would a person know? There is no definition. How would that be defined for the retailer to determine whether someone was medically authorized? How would that determination be made? And as I said, with the PST not having a definition on medical cannabis, that makes it impossible to administer.
T. Stone: I just wanted to speak to this amendment really briefly. I do support this amendment. I supported the previous one as well. What we’re trying to get at here is this: while we absolutely support doing everything possible, which is largely detailed in the broader action plan, to decrease the growth of youth vaping rates, this particular application of the PST….
Our first amendment dealt with its application on cannabis-infused juice. We’re of the view that, ideally, it would be better to deal with that broader issue of taxation related to cannabis as a separate matter.
We’ve asked the minister a series of questions with respect to what analysis has been done that has given her the confidence that a 20 percent tax on cannabis will not serve to have the effect of actually driving more people into the black market. And I think that the distinction is this: this PST tax is one tax on two very different products, two different products that will have very different markets. The cannabis market does not look at all like the vaping market — it just doesn’t. It’s two different products and two different markets that will have two very different potential health outcomes.
The stated goal of taxes, as we’ve talked about, and the concept of consumption taxes…. The proposed tobacco tax increase is part of this bill — the proposed increase in the vaping tax. The goal here is, ideally, to price people out of the market. And we know that when tobacco taxes get to a certain point, that has actually had the deterrent effect of driving people to quit smoking combustible cigarettes, which is a very good outcome.
But the cannabis market is a very different market than both the tobacco market and the vape market. While with tobacco, the effect of the higher taxes is to encourage people to quit, the black market on the tobacco side is relatively small and contained. With respect to cannabis, as I’ve said a few times now, it’s a very different market, and it’s a robust market.
In fact, if anything, the actions of this government as it pertains to their retail cannabis strategy has been an absolute disaster. We not only sell…. The volume of legal cannabis sales in this province is not only the smallest volume in the entire country second only to Prince Edward Island, but it’s a robust market in British Columbia. If you’re going to continue to see a piling-on of costs, our worry is that you’re not driving people to quit cannabis; you’re driving people to actually seek out their cannabis product, even more so than perhaps they are already, in the black market.
With respect to this particular amendment specific to the medical cannabis side of the equation, we’ve got some serious concerns about there being a 20 percent PST applicable on the sale of medical cannabis. Everyone in this House knows that medical cannabis patients receive an authorization from a physician or a nurse practitioner. The B.C. College of Physicians and Surgeons says that the authorization provided by a physician is equivalent to a prescription, and patients must be clinically reassessed regularly.
We have tried to ask the minister specific questions about concerns that the Canadian Nurses Association and the nurses and nurse practitioners of B.C. have about the application of PST on medical cannabis. Both those organizations, in a joint letter, have said: “Medical cannabis is authorized by a health professional and, like other prescription medications, should be exempt from PST.”
We referenced the arthritis society, the Canadian AIDS Society and Canadians for Fair Access to Medical Marijuana, who all have very similar concerns and don’t understand why this government is moving forward with a 20 percent tax on medical cannabis that just happens to be consumed in a vapour fashion.
To conclude my remarks on this amendment, it would appear that the government hasn’t really thought through what this intersection of two very different markets actually looks like with respect to tax policy. The cannabis market and the vape market — two very, very different markets; two very different health outcomes when people engage in these markets.
We would hope that since the government was not willing to exempt or remove the application of this 20 percent PST on all cannabis revenues, cannabis-related sales in the vaping market, they would at least be willing to not be punitive with respect to the tens of thousands — I guess almost 18,000 British Columbians — who are medical cannabis patients by implementing or imposing this 20 percent tax on their medical cannabis if they are, in many cases, taking the medication, the medical cannabis, through a vapour product.
So I strongly support this amendment and hope all members of the House will as well.
Hon. C. James: Just a couple of pieces to add. I mentioned earlier the issue — and we certainly have heard the concerns from leg. counsel — that there is no definition of medical cannabis. Therefore, that creates an impossibility to be able to carry out the amendment. I think that’s important to note.
I also want to come back to something the member from Surrey said earlier where she said the vaping products are potentially dangerous. I think we have had a lot of discussion in this Legislature about vaping products. We have had a lot of discussion from the member who brought forward a private member’s bill on vaping products about the danger of vaping products, about the challenges of vaping products. I think it’s important to recognize that, and I think it’s important to acknowledge that in this debate as well.
S. Bond: Obviously, I support the amendment that’s been tabled. But I have a question for the minister. I think this is perhaps a little less complicated than it is being described as here.
Can the minister clarify, when she notes the complexity of implementation…? Isn’t it true that medical cannabis isn’t sold at retail? In fact, it’s sold through licensed producers after medical authorization. So how difficult could it possibly be to actually exempt and look at the amendment that the member has tabled? It is actually not sold in retail, as far as we understand. Maybe the minister can clarify how it’s so complicated when we’re talking about medical cannabis.
Hon. C. James: I think that the member is showing the complexity in the question and in the discussion around vaping products that include cannabis versus medical cannabis products. The member is quite right. Medical cannabis products are received through authorization. We are talking about vaping products being sold in vaping stores that include cannabis that will, as of October, be able to be sold in stores. We are saying not two prices — one price for all vaping products in the stores.
I, again, am going to speak against the amendment that’s here. I think if the member…. We’ve shown, through this session and how quickly that goes, the ability to be able to work on amendments that have notice, that have discussion, that have the ability to look at the policy implications.
It’s a completely different discussion that the member is talking about if we get into the broader issue of medical marijuana. I understand that the member may want to have that discussion as well, but what we’re talking about here are vaping products.
The ability to be able to, on the fly, bring forward amendments that haven’t gone through leg. counsel, that haven’t had the policy discussion around other areas that are impacted, that involve buying products both in a retail store as well as through the medical system and the complexity of that means that, once again, I will speak against the amendment.
S. Bond: Obviously, we want to be able to have a look at the amendment. But we should be clear. What the minister said…. We’re talking about the use of vaping as part of a medical prescription. People have the opportunity to get a prescription to medically use cannabis, and they should have the right and the ability to choose the method, and that includes vaping.
Those products that are acquired are not acquired in the same place as other products. So the minister could actually look at an exemption for vaping use for medical cannabis. They would be sold in a separate location. Is that correct?
Hon. C. James: I think I’ve spoken already to the complexity. It’s not as simple as portrayed, and it’s exactly the reason that we have the discussion about bringing these issues forward and having the conversation before we get into making policy on the fly.
Amendment negatived on the following division:
|YEAS — 40|
|NAYS — 41|
[J. Isaacs in the chair.]
Section 1 approved.
On section 2.
S. Bond: We’re going to spend a bit of time looking at the tax rate and the analysis that the minister and the ministry undertook. Can the minister just articulate for us what decisions went into setting the tax rate and why 20 percent was chosen?
Hon. C. James: We did canvass this already, but I’ll canvass it again if the member wants it canvassed again. We did go through this all at the beginning of the discussion.
We are looking at the discussion around whether the price point utilized will discourage behaviour. So we looked at all the research around that, and certainly, there is clear research that talks about the fact that price point makes a difference. Price point is particularly sensitive for youth. Youth are more sensitive around price point, so, again, that was part of the reason we looked at it.
We also looked, I mentioned already at the beginning of this discussion, at the journal Tobacco Control, a British medical journal. It talked about how a 10 percent price increase could reduce demand between 12 and 19 percent. So again, based on those findings, we believe we could have a comparable effect. That’s why we picked the 20 percent.
Again, as I said earlier this afternoon, I believe this will need to continue to be looked at, because I think there is, obviously, the opportunity to be able to monitor, to see how it goes, to see how the ten-point plan goes and to determine whether this is the right measure or not.
Tobacco taxes are much higher, but we have a much longer history with tobacco, around the use of tobacco, and hence the decision that was made on this.
S. Bond: Just curious if the minister or her staff have had any conversation with Alberta. I think they announced that they were considering a tax, looking at the vaping tax, and I think it was actually prior to this package being announced. So have there been discussions with Alberta and whether there will be any sort of consistency in approach?
Hon. C. James: Yes, we’ve had conversations with Alberta. They are just at the initial thoughts of their process. They haven’t gotten any further than that.
S. Bond: Can the minister tell us what the current rate of tobacco tax, as a percentage of the average product, is and how that compares to the new PST rate on vapour products?
Hon. C. James: On cigarettes, we tax it as a per-unit tax, but if you convert it to a package of cigarettes, close to 90 percent is taxation. If you include the federal tax, it’s about 148 percent.
S. Bond: Can the minister just indicate why an increased PST rate was chosen, as opposed to another form of tax?
Hon. C. James: I think the first reason is that the tax already exists. It doesn’t mean creating a new tax; the tax is already in place. That makes it easier for consumers — who, certainly, already understand the tax. It’s easier for businesses. They already have the structure in place around that. Considering the number of retailers — I think we heard that discussion earlier from the member from Kamloops — it’s certainly easier to use an existing structure.
S. Bond: Certainly, all of us recognize that there is a price sensitivity, probably, and particularly for young people, and the minister has reflected on a number of reports today. Has she looked at or modelled expectations around the level of price sensitivity for young people and what we could expect to see with this increase related to youth vaping behaviour?
Hon. C. James: As I mentioned earlier, one of the pieces of research that we looked at was the journal Tobacco Control. It looked exactly at the price and at the issue of youth. It suggests that a 10 percent price increase could reduce demand. It should reduce demand, by about 12 to 19 percent. Based on those findings, we believe that our PST will have about that, comparable, without pushing out to the black market.
S. Bond: Did the ministry analyze the elasticity of demand relative to vaping products prior to setting a tax rate?
Hon. C. James: That in fact is exactly what that stat speaks to: that issue. Yes, we did the research.
S. Bond: Maybe, just for clarity, could the minister speak to how it compares, relative to tobacco products?
Hon. C. James: I want to stress again — I stressed this at the beginning of our afternoon — that this research is relatively new. There isn’t a lot of research out there, as I mentioned before. I think that’s important to note. But the research that we do have and able to review points out that in fact, tobacco is less elastic. I think that’s an important piece as well.
T. Stone: Has the Ministry of Finance done any net-present-value analysis regarding this PST tax increase?
Hon. C. James: Like other measures, we build the revenue into the budget, and we do a revenue forecast of what that’s going to be. I’m not sure what the member is getting at around his question, but it’s no different than other revenue. We build in the revenue expectation, we build in the revenue forecast, and that’s what gets built into the budget.
T. Stone: Can the minister say that with this tax increase there are going to be any projected gains based on decreased future health care costs and gains in quality-adjusted life years in the health care system?
Hon. C. James: No, none of that’s built in. That certainly would be a hope — I think, of all of us — of the ten-point plan. I think it’s important to remember, again, that this is one piece of that ten-point plan, isolating the tax piece from the other pieces. We’ll continue to do that kind of research. But certainly, the hope is that we’re going to see reductions in the kinds of incidences — most importantly, for the individuals who are facing these kinds of illnesses from products that they thought were going to be safe.
T. Stone: I agree. I think we all, certainly, hope that there will be some short-, mid- and long-term health benefits as a result of the broader action plan to crack down on youth vaping and, generally, to reduce vaping rates provincewide.
With that in mind, will the minister commit to publicizing any quality-adjusted life years or net-present-value analysis relevant to vaping and tobacco tax increases, so that we can actually measure and model the public health benefits of these PST tax increases?
Hon. C. James: As I pointed out earlier, this is a ten-point plan. We certainly hope that there will be those changes. Pulling out, we don’t do a net present value on taxation. That’s not a process that occurs.
The process of determining whether there are changes we’ll certainly be monitoring. I know the Minister of Health, if he was here, would be also talking about monitoring, because we want this plan to be successful. There will be tracking of what’s going on. There will be that kind of a view. But the changing of the dollars and accounting for perhaps savings in the health care system I think would be very hard to pull out when you’re looking at one point of a ten-point plan.
T. Stone: I’ll just maybe bundle this next question into three parts, because we have canvassed a bit the discussion around the concerns that I think the opposition has been trying to express with respect to the black market. I’m just trying to understand from an analysis perspective. One, is there an expectation on the part of the minister and her Ministry of Finance that some consumers may turn to the black market as a result of this tax increase, and if so, how many? Two, does the minister have an estimation of what the current size of that vape products black market is today? And three, do we have distinct estimates for black market products in the vapour market?
So the different types of products that cumulatively make up the vapour industry — are there some estimates that the ministry would have as to what the size of the black market would be for each of those very distinct product categories in the vapour market?
Hon. C. James: I think this is exactly the kind of information that, as the ten-point plan is implemented, we’ll have a better handle on.
There aren’t good estimates out there, but I think one of the first pieces we can all agree on is that all of the youth using vaping products is a black market because they’re not buying them legally. They’re buying them illegally. Basically, all that youth use is black market, currently, because of the challenge through the system.
They may be buying them from people who are buying them as part of the legal market and then reselling them as part of the black market, but that’s exactly part of the challenge that is faced here. As I said, as we go along, I think we’ll have better estimates. But certainly, the youth market, as I said, has got to be black market.
T. Stone: Can the minister indicate whether or not this PST increase to 20 percent will apply to online sales of vapour products?
Hon. C. James: Certainly, anyone selling on line in B.C. is already required to be able to collect the PST. It’s already a part of the requirement. Those who are selling from outside B.C. into B.C. — many of them are already part of the system. But those who aren’t, as part of the work that I talked about earlier, in making sure that we’re capturing all of the people who’ll be required to pay PST….
T. Stone: I appreciate that. I’m wondering if the minister could speak to what happens in the situation of youth — or anyone else, for that matter — accessing, purchasing, these vape products on line from retailers that are not captured by the regulatory environment here in British Columbia, not captured by the PST here in British Columbia. What protections are being considered, particularly for our youth, to ensure that that consideration is in mind?
The minister and I could probably go and have a little sidebar conversation, and we could rattle off a number of online retailers in the cannabis piece that are actually good, law-abiding organizations or companies that will ensure they’re in compliance with this right away. It’s the shadier operators, which would more likely than not be based outside of British Columbia, that would be offering their products for sale on line. That could, potentially, prove to be a rather attractive opportunity — especially, again, for youth — to access these products.
What considerations or thinking has the minister put in place to make sure we capture those retailers and ensure that the tax is applicable there?
Hon. C. James: We already have existing arrangements with border crossings around collection of PST, so we’ll just be expanding that. If this legislation passes, we’ll just be expanding that to include the new rate for vaping products. So that captures both U.S. as well as international packages coming through the U.S. That’s taken care of through the arrangements with the border crossing that are already in place.
We’re looking at all the options necessary, if the bill passes, to require vendors across Canada to register and comply, as well, with PST.
S. Bond: Does the minister know the current revenue from PST for vaping products? If not, could she outline how the projections were modelled?
Hon. C. James: It’s estimated. Again, these are estimates. The estimate is that sales are about $75 million in the province, PST roughly $5 million, and revenue for a year would be $10 million on the new adjusted rate.
S. Bond: Could the minister just confirm for us specifically the revenue from the PST increase for Budget 2019 and then the projected revenue from this measure for Budget 2020?
Hon. C. James: For 2019, for the quarter, because it only starts in January, it will be $2.5 million in new revenue. For 2020, it would be $10 million.
S. Bond: Is it the minister’s intent that these revenues will go into the consolidated revenue fund?
Hon. C. James: Yes, as all revenue does.
S. Bond: So the entire revenue that’s generated from the increase will go straight into the consolidated revenue fund?
Hon. C. James: Correct.
T. Stone: I’m wondering if the minister would be open to considering a special account for the purposes of administering and dedicating these funds to evidence-based awareness, prevention and support programs.
We heard loud and clear in the debates that we had in second reading — again, it was supported by every member of this House — that the success or failure of this action plan will rest on the resources being dedicated in every middle and high school to prevention, awareness and support.
It’s not simply posters, buttons and brochures or an expectation that there will be a one-off discussion held on an ad hoc basis at the sole discretion of each teacher or each principal in each school but, rather, an in-school program that might be modelled on Preventure or any number of other programs out there, to ensure that youth are talking to youth.
The Minister of Health said this over and over in his announcement, which was great. We agree at a high level. What we want to make sure is that the funds that are needed to ensure a robust, evidence-based prevention, awareness and support program for anti–youth vaping is actually properly funded, that the resources are made available for that program to exist in every middle and high school.
Again, I’ll ask the minister this question. Would she be willing to consider a special account for the purposes of administering and dedicating the funds that are generated from the PST on vapour products? Would she be willing to dedicate those funds to those evidence-based prevention, awareness and support programs for anti–youth vaping efforts?
Hon. C. James: On accountability, I completely agree with the member. On the government being accountable for the program, for the development of the program, for the costs of the program, for what the program is going to look like, I completely agree that there should be direct accountability.
Putting things in a special fund is not a direction that we’re heading in. I expect that every minister and every member involved in this will get their questions around how much the program is costing, what the costs of the program are and what the demands of the program are. But that program is just being developed, as the member knows well.
There are not costs, at this point, around the program. It would not be responsible to allocate money at this point, until the program is developed and determined and we determine how much costs are already in place, how much costs are needed, what the program might look like, what youth will determine the program might look like. I think the member rightfully pointed out the importance of involving youth, it being a real focus of this ten-point plan. No question about it.
I wouldn’t want to determine what that looks like until the minister puts that program together and makes a determination around that. I expect the resources that are needed to deliver that program will be provided and that the member, and all other members, will hold the minister and all of us accountable for that.
T. Stone: Well, I think we agree in spirit with what the minister is saying. I think the challenge that parents have, that educators have, that health officials have and that, I think, many legislators in this House have, is: that the government will actually make the resources available as needed to fund these robust prevention, awareness and support programs in every middle and high school across the province.
The partnership that the government has initiated with the B.C. Lung Association is welcomed. The inclusion of an expansion of the QuitNow program to include an anti-vaping component to it, or a vaping component, with a particular emphasis on youth vaping, is welcomed. But what I have not heard — what parents have not heard, what educators have not heard, what the health officials have not heard — is the youth-led, youth-delivered, youth-focused education campaign that needs to be delivered in every single middle and high school in this province.
We have not heard from the Minister of Health or from a member of government that this campaign is going to be that robust, engaged program — a program like Preventure, which I’ve talked about at length many times, that is not just a one-time discussion that gets implemented on an ad hoc basis in one school versus another and that is completely at the sole discretion of the teachers and principals in each school but rather a program that is funded.
Typically, it would be delivered by…. There would be someone from the health authority within which each school is located. That health authority individual would visit each school and would identify, with the parents, principals and teachers, specific youth individuals that are willing and able to step up to be the in-school champions. Those individuals would be ramped up and trained on the program’s curriculum. They would then be responsible for having an ongoing dialogue with students in those schools — the youth would. This would be a living, breathing exercise. It’s a behavioural exercise, a risk analysis exercise where youth are talking to youth.
These programs exist. We wouldn’t be suggesting that there be a recreating of the wheel here. I think the acknowledgment that we all need to make is that educators are running off their feet in schools — I know the Minister of Health has certainly heard this — as students, increasingly, are vaping in washrooms; in hallways; even in classes, behind their teachers’ backs; on the areas outside of the schools; just off of school property. Schools are doing everything that they possibly can to try to fight back, to try and combat this rise of youth vaping in their schools.
Every school is trying something different. I note Principal Sheldon Marsh of Revelstoke Secondary School, who has been featured recently for being quite innovative in the approach that he’s taken. He has established a buyback program in his school. He offers cafeteria credits for students who forfeit their vape devices. He has taken up a collection amongst some administrators, the parent advisory council in Revelstoke and some small businesses, and so he has managed to have 50 vape devices actually handed in, in his school, and those kids have received credits in the cafeteria.
Other schools have gone to very extreme measures, in having to take doors off of washrooms. A wide variety of different types of lectures have been provided in schools around the province. Teachers and principals, in particular, are run off their feet, and it just speaks to the importance of a standardized, provincewide program that would be in every middle and high school and would focus on awareness and prevention.
On the support side, let’s not forget about addiction here. I read into the record in second reading some pretty heartfelt comments that had been emailed to me from parents in Kamloops. In one case, a woman said: “Look, I appreciate the focus on vaping. I appreciate that we’re going to now maybe try to get ahead of it here and prevent youth from doing it in the first place, but my daughter is already addicted. What am I supposed to do with that? Where do I send her? Who do I connect her to?” Where is the support for my daughter?” This mother said that to me in her note.
I’ve had other parents come into my office and say the same thing. I’ve had 14-year-olds look me in the eyes and say: “I don’t know what to do. All I know is I’m addicted.” An expansion of the QuitNow program is great, but I’m receiving a lot of correspondence, even just in the last week. I’m being copied on everything that the Minister of Health is from folks in the health community, saying: “We’re not certain that this is going to be enough — that there’s going to be enough capacity to ensure that the addiction support programs are available provincewide for youth who are already addicted.”
I come back to the point here that the entire youth action plan falls completely flat on its face if we get the education component of this plan wrong. The words are correct. The words in the action plan have been correct. What we want to make sure of is that there is dedicated funding — that the funding that is generated from vape product sales is truly dedicated to those prevention awareness and support programs that our kids need in every middle and high school in the province.
With that in mind, I am going to move an amendment.
[BILL 45 be amended by adding the following sections:
5.1 The Vulnerable Adolescents Protection from E-Substances Special Account is continued as a special account in the general fund of the consolidated revenue fund.
Specified PST funds for nicotine education and prevention
5.2 The account consists of 100% of the amounts that are paid into the consolidated revenue fund under sections 34 (11), 35 (8), 36 (11), and 55 (3.6) of the Provincial Sales Tax Act, up to a maximum in each fiscal year that is equal to the amount shown in the Estimates as revenue in the Vulnerable Adolescents Protection from E-Substances Special Account for that fiscal year.
5.3 On the written authorization of the minister, money may be paid out of the account for the administration, operation and delivery of education programs focused on awareness, prevention, and addictions support respecting e-substances.]
This would amend sections 5.1, 5.2 and 5.3 that would provide for a vulnerable adolescents protection from e-substances special account. That would be a special account in the general fund of the consolidated revenue fund. The account would consist of 100 percent of the amounts that are paid into the consolidated revenue fund under a variety of sections — I’ll let the minister, obviously, take a look at that — up to a maximum in each fiscal year that is equal to the amount shown in the estimates as revenue in the vulnerable adolescents protection from e-substances special account for the fiscal year.
Last but not least, the amendment would provide for this. “On the written authorization of the minister, money may be paid out of the account for the administration, operation and delivery of education programs focused on awareness, prevention, and addictions support respecting e-substances.”
I think a very reasoned amendment that would ensure that the resources are made available to support the education programs and the awareness, prevention and support programs that are needed in every middle and high school. I’ll table that amendment now.
Hon. C. James: I believe the amendment is out of order because it imposes on the Crown.
S. Bond: I just would like to have the minister clarify, then. The concern here is about transparency. This isn’t about imposing any financial expectations on the Crown. It’s about saying to British Columbians that revenue will be made transparent and will be set aside to actually fund the plan that the government has laid on the table. It’s about transparency. It’s about saying to British Columbians: “Here’s the line. We’re going to take this money, and we’re going to use it when it comes to the vaping.” Is the minister saying that it is impossible to create a dedicated fund from revenue that’s generated from vaping?
Hon. C. James: I had this conversation with the member’s colleague, but I’ll repeat it again. The member is quite right to hold the government and ministers accountable for where dollars are spent. That’s exactly the process that occurs in this Legislature each and every day, which occurs through the budget process and occurs through the estimates process.
The member raised some very good options and ideas around a youth program. He also talked about how the strength of this program is that youth will be helping to develop it. We have no approach at this point, because we want to make sure that youth are involved, because we want to look at the good programs that are out there, and we need to ensure that people are engaged.
For the opportunity for those programs to be developed, to determine how many dollars will go in it, I fully expect every member on that side of the House will be asking those questions as we go through the process. It is not the only way to be accountable, to put money into an account. The accountability happens each and every day. As ministers, we are fully responsible for how the budget is spent, for where those dollars go. I expect the members to hold us accountable.
The Chair: Members, I’ve had a chance to review the amendment, and I’m going to rule it out of order. It goes beyond the scope of the bill.
Amendment ruled out of order.
S. Bond: Well, can we continue debate on the issue at hand, on the section that we’re debating?
The Chair: Yes.
S. Bond: To the minister, then: this isn’t at issue. We’re not here, with this amendment, trying to debate the issue of what programs are going to be in place, or the quality of them, or which ones they’re going to be. What we’re debating is a fiscal matter. The government is imposing a new tax, an increased tax, a significant tax — which, by the way, we and probably most British Columbians agree with. What we are saying to the government is this: be transparent about how much money is raised and where that money is going.
The government intends to roll that money into the consolidated revenue fund. Then it will make a determination, I’m assuming, across ministries. There’s no cross-ministry working group yet, but we’re looking forward to hearing who that will be. When it goes into the consolidated revenue fund, what we’re arguing is that that revenue — all of the revenue that’s been generated from a new tax imposed by this government — be clearly outlined for British Columbians: where it’s being spent, how much is being spent.
We’re not debating the program issues today. We’re debating the fiscal implications of rolling the funds into the consolidated revenue fund. Is the minister willing to consider how that information is made public and how the spending related to the total revenue generation is made clear to British Columbians?
Hon. C. James: To the member: again, we’ve had this conversation, but I’m happy to have it again if the member requires it.
The revenue — as with all governments, regardless of whether it’s this government, the previous government or governments before that — will go into general revenue. The program will be developed. The programs will have a cost to them. Government will be accountable for those costs, accountable to make sure that the program is implemented. I think that certainly, the spirit that I heard in second reading, from all members in this House, was that we want this to be implemented well. I expect we’ll be held accountable for that.
With that, noting the time, hon. Chair, I move that the committee rise, report progress and ask leave to sit again.
The committee rose at 6:28 p.m.
The House resumed; Mr. Speaker in the chair.
Committee of the Whole (Section B), having reported progress, was granted leave to sit again.
Committee of the Whole (Section A), having reported progress, was granted leave to sit again.
Hon. M. Farnworth moved adjournment of the House.
Mr. Speaker: This House stands adjourned until 10 a.m. tomorrow morning.
The House adjourned at 6:29 p.m.