• James Armstrong

Local producers unfazed by upcoming increase in alcohol tax


An upcoming federal tax increase on beer didn’t appear to bother Brasserie Bois Blanc customer Graham Price (left) seen here with owners Frédéric L’Ecuyer (centre) and Martin Brooks (right).

An increase in the federal excise tax on beer, wine, and spirits scheduled for Sunday, April 1 wasn’t a huge concern for the owners of Brasserie Bois Blanc in Hudson.

“I really wasn’t aware of the tax increase,” Martin Brooks told The Journal, speaking on behalf of himself and his partner Frédéric L’Ecuyer. “It will affect the larger producers more than us.”

He said since their Brasserie opened 18 months ago, they had produced about 18,000 litres of beer. “Our plan for 2018 is to increase that to 100,000 litres. For us, tax is part of the cost of doing business,” said Brooks.

First increase in 30 years

According to information received from the office of Vaudreuil-Soulanges Member of Parliament, Peter Schiefke, this is the first increase in federal excise tax in 30 years. Consumers will see an increase of about five cents per case of 24 bottles of beer, less than a penny on a 750 millilitre bottle of wine, and a seven cent increase for a bottle of spirits. The increase was introduced in the 2017 federal budget with an inflationary adjustment clause referred to by the industry as an escalator tax.

Exemptions exist

Wine produced from100 per cent Canadian grown agricultural products are exempt from the federal excise tax as stated in the information from Schiekfe’s office.

“We aren’t affected by federal excise tax,” said Serge Primi, owner of Vignoble Côte de Vaudreuil in Vaudreuil-Dorion. “If we were using any imported products, then we would have to pay,” he added.

It’s a similar situation for the ‘make and bottle your own wine or beer’ businesses. “There’s no federal excise tax on the raw, unfermented products we use,” said James Mitchell, owner of Les Vins Élégant. But for the ‘make your own’ proprietors, the news has a positive side. “We usually see an increase in customers when the taxes go up,” said Mitchell.

Industry protests automatic increase

At a national level, various organizations representing brewers, vintners, and distillers have been making presentations to the federal finance minister and organizing online petitions demanding the cancellation of the automatic tax increase. A presentation made by Luke Harford, President of Beer Canada to the Canadian Federal Government’s Standing Committee on Finance on Monday, May 15, 2017 stated there are four reasons for removing the escalator tax.

“First, tying the consumer price index to excise duty rates is too rigid and ignores regional economic differences. Second, the escalator bypasses Parliament's role in approving tax increases. Third, Finance Canada has acknowledged that it did not analyze the economic impact of the escalator or what effect it would have on our industry,” he said. (For further information see: www.ourcommons.ca/DocumentViewer/en/42-1/FINA/meeting-90/evidence).

Federal response

On Monday, January 29, The Journal contacted the Ottawa office of Finance Minister Bill Morneau to ask if the escalator tax increase will continue as planned. Press Secretary for the Minister, Chloé Luciani-Girouard responded by email saying Canadian small brewers will continue to benefit from decreased rates of tax on the first 7.5 million litres of beer they produce saving them anywhere from $56,000 to $763,000 per year. As for the annual inflationary adjustment, it was described as providing alcohol producers with greater security in the future and is in line with actions taken by many provinces.

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