159194
160283
Dan-in-Ottawa

Winery taxes popping?

While it would be relatively easy to cover the latest developments of the WE Charity Foundation, I would rather focus on outcomes of government policies.

More specifically, when former Conservative Finance minister, the late Jim Flaherty, created a very important policy to the Similkameen and Okanagan Valleys.

On July 1, 2006, Minister Flaherty announced that wines that were produced in Canada, with 100% Canadian grapes, would be fully exempt from paying the federal excise tax on alcohol.

This was a policy that, according to Wine Growers of Canada President Dan Paszkowski, has “resulted in more than 400 new wineries and 40 million litres of new wine sales.

“The annual economic impact of this growth is $4.4 billion annually. Now that was a smart federal program with a solid ROI."

Here in the Okanagan, we have all witnessed many wineries and resulting spin-off business emerge throughout literally every community. 

Flash forward to 2017, the Trudeau Liberal government introduced a permanent measure to create an “escalator excise tax” in that year’s federal budget.

What is an escalator excise tax?

It is a tax that: 

“would be levied on most wine, beer and spirits sold in Canada. Under an escalator tax, essentially the tax rate is increased every year and is set by civil servants linked to inflation as opposed to having to come before the House for debate in the annual budget.”

As the Conservative opposition at that time, we opposed this tax.

Unfortunately, Australia, a country that imports a significant amount of wine into Canada, filed a trade challenge with the World Trade Organization (WTO) over this policy.

The reason — the Trudeau escalator tax would increase the cost of Australian wine to Canadian consumers every year, however, 100% Canadian grown and produced wines would be exempt.

This week, it was quietly announced that the Trudeau Liberal government will, over the course of the next two years, remove the excise exemption for 100% Canadian grown and produced wines, thus increasing their costs.

How this will impact our local wineries here in the Okanagan and elsewhere at this point remains unknown.

B.C. wineries already pay a significant amount of taxes to local, provincial and federal governments that competing wines outside of Canada do not pay.

There is also the added test that currently only three Canadian provinces allow winery to consumer shipping directly from outside the home province.

With restaurants generally purchasing less wine on account of reduced hours and capacity, these are now tough times for an important local industry to our region.

Ironically, with wines sales being reduced, the considerable amount of excise and sales tax on wine is also reduced, thus netting less government revenue in these areas.

My question this week comes back to the escalator tax:

  • Do you support a tax automatically increasing each year, set in legislation, as opposed to being fixed and reviewed each year in a budget?

I can be reached at [email protected] or call toll free 1-800-665-8711.



160961


Response to COVID-19

The House of Commons reconvened briefly this week to allow Parliament to pass Bill C-20:

  • “An Act respecting further COVID-19 measures.”

Bill C-20 proposed a number of different measures, such as allowing the extension of the Canadian Emergency Wage Subsidy (CEWS) until Dec.19.

The bill also included the ability of government to update much of the CEWS program criteria until Nov. 21.

A CEWS “top-up” subsidy, of up to an additional 25%, will now be available for employers that have been harder hit by the pandemic and are in industries that may require more time to recover.

Aside from the many changes to the CEWS program, Bill C-20 also allows the federal government to share some personal information.

The reason for this is to complete a one-time payment to Canadians with disabilities.

To qualify, an applicant must hold “a valid Disability Tax Credit (DTC) certificate (eligible persons not yet in possession of such a certificate would be able to apply for one up to 60 days after Royal Assent to be considered for the one-time payment).”

Canadians receiving the Canada Pension Plan disability benefits or Quebec Pension Plan disability benefits as well as those receiving disability supports provided by Veterans Affairs Canada will also qualify.

Those who meet this eligibility criteria will receive a non-taxable, one-time payment of up to $600.

It is expected that approximately 1.7 million Canadians will qualify for this benefit.

Aside from the debate and passing of Bill C-20 in the House of Commons, there were also two days of question period.

While Prime Minister Justin Trudeau did not participate in Question Period the first day, he did attend the second day and was questioned heavily on the decision of his government to sole-source a $910-million volunteer program to the WE Charity, which has since been cancelled.

As the shadow cabinet critic for employment, workforce development and disability inclusion, I was pleased that Parliament was able to pass the much-needed disability benefits in Bill C-20.

My question this week is not about Parliament.

In the Okanagan there have been reports of a growing number COVID-19 cases from local social gatherings.

  • How satisfied are you about the current actions undertaken by all levels of Government to contain
    COVID-19?

 I can be reached at [email protected] or call toll free 1-800-665-8711.



WE have a problem

Prime Minister Justin Trudeau apologized this week for not having recused himself from a cabinet decision where he was in conflict of interest.

The cabinet awarded a sole-sourced, $900-million program to be administered by WE charity, which has close ties to the Prime Minister’s family.

It has been revealed members of the Prime Minister’s family received financial payments from WE Charity.

As you may have also heard, the Ethics Commissioner announced an investigation relating to Prime Minister Trudeau’s involvement in this decision.

This would make the third time that the Ethics Commissioner has investigated Prime Minister Trudeau.

The purpose of my report this week is not to question the Prime Minister’s judgment, his apology or the ethics investigation, but rather the decision to outsource the program as many of its details are deeply concerning.

Many Canadians will know that, for decades now, the Canada Summer Jobs program has successfully matched students with employers and, for the most part, has been successfully and efficiently administered by the Government of Canada public service.

The only major complaint over the years has been a lack of funds to meet the all of the requests of potential employers.

Rather than increase funding by $900 million to the Canada Summer Student Jobs program and increase the mandate to include charities and not-for-profit organizations, the Trudeau Liberals came up with a different scheme.

The $900 million was directly awarded to the WE Charity, which, in turn, intended to use teachers and camp operators to recruit students to become paid volunteers.

The recruitment fees payable to teachers and other organizations would be in excess of $10,000 for a certain number of students. The students would then be paid below minimum wage to ‘volunteer’ for a set number of hours.

Aside from the issue of paying volunteers, there is another challenge.

Even if the program were able to recruit 100,000 students who worked enough hours to earn the maximum credit of $5,000, this only works out to $500 million.

Where does the other $400 million end up?

In recruitment fees?

Either way, it does not make sense to spend $900 million and have only $500 million reach students who are ultimately being paid less than minimum wage to volunteer.

At the same time, there are small business owners and other organizations that have applied for the Canada Summer Jobs program and have been denied placements due to a lack of funding.

The WE Charity and the Liberal government have made the decision to end this project leaving the future uncertain.

As the Conservative Opposition, we have recommended the Trudeau Liberal government should instead use that $900 million and invest it into the Canada Summer Jobs program and ensure that charities and non-profit organizations have the opportunity to apply.

My question this week is:

  • Do you agree?

I can be reached at [email protected] or call toll free 1-800-665-8711.



157668


Fiscal sticker shock

The country wanted a fiscal update, but the Liberal government delivered a fiscal snapshot.

There was a growing demand for a fiscal update of the federal government finances following the spending response to the COVID-19 virus, as well as the revenue impact from having large sectors of our economy shut down.

But the Liberal government provided what it termed a fiscal snapshot, as opposed to a proper, full fiscal update.

The numbers are staggering.

The deficit for this fiscal year is expected to hit $343 billion. To put that figure into perspective, during the world financial crises in 2009, the federal deficit was $56 billion.

Our total debt in Canada is now expected to hit $1.06 trillion in 2021, significantly up from $685 billion in the previous fiscal year.

Keep in mind, this is the spending to date.

There are still many groups, individuals and organizations, who have received promises from the prime minister for additional financial supports that have yet to be delivered.

Also, of concern is that our debt to GDP has shot up to 49%, from what was projected to be around 30%.

Canada’s credit rating has also been downgraded by one major credit rating agency.

The credit rating downgrade is of concern because credit rating downgrades can increase the interest for servicing the debt. 

Historically low interest rates are helping to keep debt servicing levels lower, and, for now, more manageable. 

The challenge is when interest rates rise, the debt servicing costs increase significantly.

I suspect anyone with a variable rate mortgage knows this well.

The more notable challenge is that this current level of borrowing and spending is unsustainable.

Many financial experts have already cautioned that Canada no longer has the required fiscal capacity if there is a serious second wave of the COVID-19 virus.

As the current program spending is unsustainable, the Trudeau Liberal government will need to come up with a successful plan to transition Canada back into a situation where there is growth in GDP and employment.

At the same time there will also need to have a debt management plan that has a relationship to government revenues as well as expenditures. 

To date the Liberal government has not released any plan of this kind.

There is no finger pointing in this week’s report.

We are all Canadians in this situation together and we will be dealing with these circumstances in our future.

My question this week:

  • How concerned are you at the lack of a transition plan to move Canada forward, and is now the best time for one?

I can be reached at [email protected] or call toll free 1-800-665-8711.



More Dan in Ottawa articles

159506
About the Author

 

Dan Albas, Conservative Member of Parliament for the riding of Central Okanagan – Similkameen – Nicola, is the Shadow Minister for Employment, Workforce Development & Disability Inclusion.

Before entering public life, Dan was the owner of Kick City Martial Arts, responsible for training hundreds of men, women and youth to bring out their best.

Dan  is consistently recognized as one of Canada’s top 10 most active Members of Parliament on Twitter (@danalbas) and also continues to write a weekly column published in many local newspapers and on this website.

MP Dan welcomes comments, questions and concerns from citizens and is often available to speak to groups and organizations on matters of federal concern. 

He can be reached at [email protected] or call toll free at 1-800-665-8711.



158766
The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

Previous Stories



156109