Distillers rally support to reduce tax

Distilleries from across Canada are calling on representatives from all political parties to lobby the federal government to reduce a tax affecting their operations.

The businesses want Ottawa to immediately match excise parity with the 2017 small distillers excise agreement in the U.S.

“Our message is to all MPs, but particularly those who have craft distilleries in their ridings. They are familiar with these operations and understand the positive impact they have had on local employment and agricultural production,” said Tyler Dyck, president of the Craft Distillers Guild of B.C., and CEO of Okanagan Spirits Craft Distillery in Vernon and Kelowna.

In 2017, the U.S. government attempted to stimulate job growth and agricultural production by reducing the excise rate on the first small amount of alcohol that a domestic U.S. distillery produces (the first 100,000 proof gallons).

“With the U.S. government giving up a little upfront excise revenue, small and medium sized American distilleries had additional cash to invest in equipment, labour and marketing. It worked fantastically well in the U.S., with almost 1,000 new distillery upstarts since its implementation and tens of thousands of jobs created,” Dyck said. “And the best part is that all of the economic development is local and spread out across all parts of the country.”

Currently, Canada has an escalator tax attached to the excise tax and domestic distillers pay $12.610 per litre compared to about $1.77 per litre in the U.S.

“This massive cross-border tax excise imbalance has essentially made it impossible for Canadian distillers to compete and has stunted the potential of distilleries and agricultural producers,” Dyck said.

“There is a need for MPs to help let distilleries power the economy one bottle at a time. Not only does this mean more employees at distilleries supporting families with good paying jobs, it means increased opportunities for fruit from B.C., Ontario and Quebec, Prairie grain and Maritime berries. The spinoff effect is significant and truly national in scope,” he said.

Information is being provided to Members of Parliament about the benefits of distilleries to their constituents and communities.

“This is something everyone can stand behind regardless of party membership, especially considering that we all need to stand with our domestic entrepreneurs if we are to survive the economic fallout from the Covid-19 pandemic,” Dyck said. “What we are asking for is extremely easy to achieve as the model has already been proven successful south of the border. Given the collective need to recover our economy, we believe this would be an ideal time to give the public and the Canadian agricultural sector positive news.”

The campaign has already been embraced by business and agricultural organizations, and in September 2019, delegates at the Canadian Chamber of Commerce conference supported a Greater Vernon Chamber resolution that urges the federal government to match the excise rate in the U.S.

“We must allow entrepreneurs the opportunity to not only survive but to thrive. And in turn, they give back to our communities by creating employment, using local fruits and grains and bolstering agri-tourism. Economic development is always important but it is critical as communities navigate the post-COVID world,” Krystin Kempton, president of the Greater Vernon Chamber of Commerce in Vernon, B.C. said.

Chambers of Commerce across Canada will be asked to contact their Members of Parliament in support of amendments to the excise tax.