Some of the provinces, including Ontario, shortly or immediately after we raised the duty on spirits from $4 to $7 in the fall of 1939, also raised their mark-up on spirits, which in effect amounted to an increase in the provincial tax to correspond or practically correspond with the increase in the dominion tax. The result of that was that the sales of spirits in the liquor stores of
Ontario dropped off to a marked degree. Not only that; I was informed that smuggling of spirits into Ontario began to take on proportions, and this was regarded as sufficiently serious to justify the Ontario liquor commission in lowering its mark-up of spirits, which they did in November or December of 1939. This incident was taken by us, and I am sure by the government of Ontario, as indicating that the taxes on spirits, whether by way of dominion excise duty or of provincial mark-up, could not safely be raised without danger of increased illicit importation, illicit manufacture in Canada through stills and so on, and of course, illicit sales.
Having already raised them so largely in the fall of 1939. I believe I stated in my budget speech that the consumption of spirits had not increased. I find that it increased somewhat, but not to any marked degree. The total proof gallons of domestic and foreign matured spirits entered for consumption for the fiscal year 1939-40 was 3.645,892.74. The quantity for the fiscal year 1940-41 was 3,850,238.82, showing a very small proportionate increase in the consumption of spirits. That is contrary to the impression which a good many persons in the country have, and it is in contrast to the large increase in the consumption of beer.
Yes, in volume. The hon. gentleman asks whether this twenty per cent increase in the duty on malt will cause an increase in the price of beer. There are some indications, I am informed, that the breweries may absorb the increased tax, but I do not know about that. The brewers .might absorb the increased- tax, but I do not know. They will probably find some way of passing it on.