Distilleries and brewers want excise tax cut

OTTAWA — Liquor producers hope the federal government will lower the excise tax in its next budget.

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Spirits, wine, tobacco products and cannabis products produced in Canada are subject to excise tax which is adjusted each year on April 1st. It rose once more on Friday.

The House of Commons Standing Committee on Finance recently recommended that the federal government “adopt a progressive excise tax system, along the lines of [celui aux] United States, to help small Canadian distillers and other craft liquor producers succeed in Canada and abroad.

The recommendation has been welcomed by microbrewers across the country.

“The committee understood that our excise tax rates were completely crazy, especially when compared to those in effect in the United States and other countries,” said the executive director of the Canadian Microbreweries Association, Rick Dalmazzi. He heard us. Will the government do it this year? That’s another question.”

The United States Congress changed the excise tax for beer importers and brewers in 2017.

According to the American group Beer Institute, 99% of breweries benefited from a reduction of half of their excise tax because of the significant reduction in the rate for small producers. The largest brewers only got a three percent cut.

In Canada, according to Dalmazzi, regarding 1,000 of the 1,200 microbreweries produce less than 2,000 hectoliters of beer a year.

“Regardless of the size of the brewery, you pay excise tax at a certain rate. This increases according to the hectoliters produced.”

But the lower tax rates are limited to a production of 75,000 hectoliters, a volume seemingly unattainable when the system was put in place 15 years ago.

Today, the largest microbreweries can produce around 200,000 hectoliters, and even more.

“The medium-sized and larger ones want to expand,” adds Mr. Dalmazzi. The excise tax, especially the top rate, is really hurting them.”

Vineyards

Video: No tax return, no $500 (Le Devoir)

No tax return, no $500

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All Canadian vineyards will face an increase in their expenses starting in June. They will no longer be exempt from excise tax for the first time in 16 years.

The whole thing is the result of a trade dispute with Australia. This country has complained to the World Trade Organization that this exemption discriminates once morest imported wine.

Canada has agreed to reinstate the excise tax for vineyards as of June 2022.

In 2021, the government has earmarked $101 million over two years for the implementation of a program for the wine sector to help counter this additional expense.

“We would like to see the terms of the program,” says the CEO of an association of vineyards in Ontario, Grape Growers of Ontario, Debbie Zimmerman.

She adds that the sector wants this program to be extended for another 10 years. “We need some stability for the future.”

The pandemic has caused uncertainty among the roughly 700 wineries in Ontario, Quebec, British Columbia and Nova Scotia, which rely heavily on consumer tourists.

Many wineries weren’t able to hire enough foreign workers during the pandemic, Zimmerman said. The producers had to deal with problems they weren’t used to.

“Usually, following a bad harvest, we tell ourselves that it will eventually work out. This was not the case with the pandemic, because it remained in place, year following year.

The lifting of restrictive measures has sown some hope in this sector. Profit margins remain slim for many small producers. There are concerns that rising costs will be passed on to consumers, making Canadian products less competitive. This might cause closures.

Finance Minister Chrystia Freland’s office did not respond to a question regarding the recommendation from the Standing Finance Committee.

A spokesperson for the Department of Agriculture and Agri-Food is content to say that the government is working with vineyards to set up the assistance program. More information will be revealed soon.

Opposition MPs introduced bills this week to amend the Excise Act and the Excise Act 2001.

Conservative Pat Kelly wants the automatic annual duty adjustment for beer, malt liquor, spirits and wine eliminated. He is also asking for a rate cut.

“This ever-increasing tax is making it harder to enjoy having a beer with friends or opening a bottle of wine at dinner, and making that pleasure increasingly unaffordable for working Canadians who already have to deal with a crisis in the economy. ‘inflation,’ he told the House of Commons on Thursday.

For his part, NDP MP Richard Cannings wants to eliminate the excise tax on non-alcoholic craft beers.

“None of Canada’s major trading partners have an excise tax on low-alcohol beer,” he said.

Both bills passed first reading.

Sarah Ritchie and Jordan Press, The Canadian Press