Increasing excise tax tough on Canadian craft distilleries

Tax hike hits distillers hard

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South Okanagan-West Kootenay NDP MP Richard Cannings

I was recently talking to Jorg and Anette Engel of Maple Leaf Spirits, a small craft distillery in Penticton.

Theirs was one of the first craft distillers in the region and has taken advantage of the bountiful fruit of the Okanagan to produce award-winning brandies and other liqueurs.

As their business grew over the past 20 years, they saw other small distilleries establish in the region and that strong growth in the craft distillery sector has been exceeded by the growth in the number of craft breweries and small wineries.

Like many businesses, this sector has been hard hit recently by soaring inflation—the cost of almost everything that goes into their products has been rising. But they also share another inflation-related challenge that no other sector has to deal with—an excise tax that automatically rises as inflation rises.

Since 2017, this tax has gone up every year without any legislation or parliamentary debate and this year will increase by a whopping 6.3 percent, the largest one-year increase in the last 40 years.

Distillers like the Engels are going to struggle to to stay in businesses.

I don’t often dive into the details of tax changes in my column but I hope you’ll bear with me this time as this sector is particularly important in South Okanagan-West Kootenay. These businesses, many of them small, family-owned companies, have combined two traditional pillars of the local economy—agriculture and tourism—to create a powerful new centre of growth for the region.

I want to be clear, all these businesses are fine with paying an excise tax on beer, wine and spirits. But they are concerned about the fairness of how this tax is now structured and calculated. On top of the escalator feature, excise taxes on alcoholic beverages produced in Canada are treated differently depending on whether it’s beer, wine or spirits, and very differently when compared to excise taxes levied by our biggest trading partner, the United States.

Excise taxes are much lower in the United States and are structured so that small producers pay much less on a sliding scale than bigger producers. In Canada, only beer excise tax is scaled by the size of operation, but the average tax is still twice that paid in the United States.

The wine sector is in a special situation because most wineries in Canada never had to pay excise tax until last year when Canada eliminated an exemption for wines made from Canadian grapes after a trade dispute with Australia.

After strong lobbying from the wine industry, the federal government did step up with a support program to help wineries adapt to this new reality, but that support is set to disappear next year. Craft distillers are the hardest hit in many ways. The excise tax on a one-litre bottle is $5.22, and when you add provincial taxes that goes up to about $9.

That makes it very difficult for local producers such as Jorg and Anette Engel to compete with imports from other countries that are taxed at a fraction of that rate.

The House of Commons Finance Committee has recommended the government freeze the excise tax rate at 2022 levels for at least the next two years until inflation comes down to normal levels, and I hope that the government takes that advice in the budget coming next Tuesday.

I also hope that they will listen to Canadian producers of beer, wine and spirits and restructure the excise tax to make it fairer for small producers so that this sector can continue to make fine products and a very important contribution to our local economy.

Richard Cannings is the NDP MP for South Okanagan-West Kootenay

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

World class battery recycling provided in Trail

Trail battery hub

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South Okanagan-West Kootenay MP Richard Cannings.

Most people in the southern Interior of B.C. know there’s a big smelter in Trail—one of the biggest in the world. But fewer are aware of the metal-based network of other companies in Trail that add to the economic impact of the smelter.

Two of those companies have battery recycling operations that are among the biggest on the continent, making Trail one of the most important recycling hubs in North America.

Metal Tech Alley is a business accelerator in Trail dedicated to supporting companies that build the circular economy in the West Kootenay.

A couple of weeks ago, I toured the three facilities mentioned above—the Teck smelter, KC Recycling’s lead-acid battery recycling plant and Cirba Solutions (Retriev) recycling operation that deals with all other types of batteries.

The smelter is impressive—a vast industrial complex employing hundreds of people, bringing ore in from all over the world and producing huge amounts of zinc, lead, silver and other metals. It has been a mainstay of the Kootenay economy for more than a century, taking advantage of the local supply of clean hydro power to keep going long after the local mines ran out.

The real eye-opener for me, though, were the two recycling plants I visited.

KC Recycling is the largest lead battery recycler in the Pacific Northwest. I didn’t realize how recyclable ordinary car batteries are, but when you buy a new one, your old battery is packed up and sent to a recycling facility.

Chances are, if you live somewhere in B.C., that battery will end up at KC Recycling. All of the lead that makes up the bulk of the battery and the lead sulphate from the spent cells are separated and sent to the Teck refinery for processing back to pure lead, which is then shipped back to battery manufacturers.

The same goes for the plastic battery cases, which is turned into plastic pellets and shipped to the same manufacturers.

Lead-acid batteries are considered hazardous waste within Canada and are shipped under strict reporting protocols that track each battery. Some of the batteries that don’t go to KC Recycling end up being exported to Asia as automotive scrap, however, and can end up in recycling facilities that lack any amount of environmental protection.

It’s time we kept our hazardous waste at home in Canada to make sure it is recycled safely as it is done in Trail.

The story at Cirba Solutions is another remarkable tale of success. Formerly known as Retriev Technologies, Cirba is one of the leading battery recyclers in North America, specializing in lithium batteries that have become so prevalent and critical to the success of modern technical devices and electric vehicles.

Like the story of where your car batteries go, if you’ve ever dropped smaller batteries off at your recycling centre for disposal, they end up in Trail at Cirba Solutions.

If you’ve ever been told new batteries can’t be recycled, don’t believe it as Cirba can recycle any battery out there, producing lithium salts, cobalt cake and other valuable products for re-use. Cirba also handles large lithium-primary batteries from industrial and military applications. These require extra care as pure lithium is highly reactive. The Trail facility is the only one in North America that can deal with these batteries.

The lithium-ion batteries that power electric vehicles are fully recyclable as well but present a bit of a challenge to recyclers as they are large, difficult to open up and every car model has a different shaped battery to fit with the vehicle design. The volume of these batteries coming in for recycling is expected to rise as more electric vehicles hit the road, but there will be a 10-year or more delay as the life span of these batteries seems to be longer than previously estimated.

The combination of the big Teck smelter and continental leaders in battery recycling technology makes Trail an ideal site for further growth as a battery hub for Canadian industry and I’ve begun conversations with the federal government about the investments needed to accomplish just that.

It would be yet another good news story that combines a circular economy of recycling with the high tech materials the world needs.

Richard Cannings is the NDP MP for South Okanagan-West Kootenay

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

South Okanagan-West Kootenay boundary change raises concern

Electoral boundary changes

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South Okanagan-West Kootenay MP Richard Cannings.

Every 10 years, Elections Canada is obliged by law to redistribute the boundaries of federal electoral districts (ridings) to address changes in local populations across the country.

A boundary commission is struck in each province and these commission are non-partisan, an important distinction from the process followed in the United States, where electoral boundaries are set by local politicians.

The Federal Electoral Boundaries Commission for B.C. recently tabled the penultimate draft of its proposed changes to the electoral map. Surprisingly, this draft was radically different from the first draft, significantly affecting the boundaries of (the South Okanagan- West Kootenay) riding.

Unfortunately, there is no opportunity for direct public input at this stage.

I’d like to outline how we got to this point, present some of the details of the proposed changes and provide an opportunity for feedback of any local concerns.

The commissions consider a number of factors in their decisions, the most obvious of which is to ensure the population of each riding comes as close as possible to the provincial average. In BC’s case, the average is 116,600 people per riding.

Just as important is that they must also take into account social and economic relationships between communities, geographical barriers and the history of past electoral boundaries.

Because of recent population growth, the B.C. commission had to add one new riding to the province and it decided to centre that new riding on Vernon. That addition caused a ripple effect of necessary changes to the ridings in the central Okanagan, Shuswap and surrounding areas.

One of the suggestions in the 2022 draft involved changing the riding of South Okanagan-West Kootenay by splitting Penticton in two, the west half going to a riding including West Kelowna and the east half remaining with the south Okanagan. There was significant public concern about that proposal and numerous groups and individuals made presentations to that effect in the extensive public input process that took place in 2022.

Since the eastern part of South Okanagan-West Kootenay remained untouched, there were essentially no comments or input from the West Kootenay in response to the first draft.

The boundary commission’s second draft showed it listened to the residents of Penticton and kept that community whole, but that news was overshadowed by drastic changes elsewhere in the riding. The entire Similkameen Valley was added on the west, the Arrow Lakes and Slocan Valley were moved into the new Vernon riding, and two parts of the West Kootenay were removed and added to the East Kootenay riding. As well, the ski resort of Big White was moved into the Kelowna riding.

So how do these changes meet the mandate of the commission? Well, they hit the population target of 116,000 bang on—well within the 25 percent margin allowed. The addition of the Similkameen to the south Okanagan riding makes sense from a social, economic, and historical context. Big White is obviously closely tied to Kelowna (and conversely, the addition of the Similkameen finally moves Apex into the same riding as Penticton).

But I’m hearing a lot of concern about some of the changes in the West Kootenay. For instance, Montrose and Fruitvale are essentially part of Trail, but the proposal separates them from that community and moves them into the East Kootenay. Castlegar neighbourhoods just outside the official city limits are cut off from their community in a similar manner.

The commission’s task is a difficult one, but I’m hoping it can address these concerns in the final decision, expected next spring.

The only official avenue for input now is my ability as an MP to present concerns to the House of Commons Committee on Procedure and House Affairs, which can pass them on with recommendations to the commission.

I have started conversations with elected officials throughout the riding on this issue but would like to hear from anyone with comments or concerns about these boundary changes. Please email me at [email protected].

More information, and the commission’s full report, can be found at https://redecoupage-redistribution-2022.ca.

Richard Cannings is the NDP MP for South Okanagan-West Kootenay.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Affordable child care will have huge impact on economy

$10 a day child care

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South Okanagan-West Kootenay MP Richard Cannings.

When the Royal Commission on the Status of Women recommended a national childcare program in 1970, I was still a Pen-Hi student.

I never thought it would take more than a half-century for Canada to create legislation for such an important program. But, on the heels of the birth of my third grandchild, Canada is very close to doing just that. Fifty years of tireless advocacy by women, unions, childcare workers and my own political party has resulted in the passing at second reading of Bill C-35, and we are on our way to a high-quality, affordable, flexible and inclusive early learning and childcare system.

In B.C., record provincial government investments have come a long way, and now with federal commitments, the path to universal $10 per day coverage is on track for 2026.

In the midst of a cost-of-living crisis, where the cost of almost everything has increased, childcare is a rare exception. Parents are already seeing as much as a 50% reduction in childcare costs, providing real relief to thousands of families. In Penticton, we now have multiple $10 per day facilities, with over 250 $10 per day centres across the province.

Last week I spoke with Amanda Burnett, a Penticton mother of two and a passionate childcare advocate. She agreed, things are definitely on the right track. She shared that, for the first time in two years, she has childcare for both her children and is no longer on a waitlist. Her childcare bill used to be more than $625 a month per child. She is now paying $200 per month per child for full-time care. That has not only removed a huge financial and emotional burden but allowed her to shift those investments to going back to school to finish her degree.

Indeed, what was true in 1970 rings just as true today. The social and economic benefits of child care are well established in 2023. Accessible child care is one of the most significant factors in promoting gender equality by allowing more parents, particularly mothers, to participate in the workforce and achieve greater economic security. Through the pandemic, women were disproportionately impacted and the fallout was devastating for gender equality.

Women have always held an increased burden for unpaid care but the pandemic ratcheted up those inequalities. Upon trying to re-enter the workforce, finding the childcare needed was a challenge for far too many women.

Often, when we think of the solutions to the labour shortages much of our region is experiencing as access and affordable housing is a key consideration. But access to affordable, flexible and inclusive child care will go a long way to getting the productive work force that is already housed in our region into the labour market.

It has been 30 years since the Liberals first promised a national childcare program. Without the NDP at the table, this would not have happened. We worked hard to achieve this legislation and pushed to make it stronger. We insisted the government prioritize non-profit daycare to also ensure accountability and for livable wages for childcare workers. We also held them to commit to long-term funding.

As this legislation goes through the House, I will continue to push to make this bill even stronger. A national childcare program will only be successful and sustainable if the workers who make it possible are treated with dignity and paid fairly. Buildings and spaces are not the key pieces of the childcare puzzle—workers are. We need to improve this bill with a workforce strategy to address staffing shortages in this sector.

This is a good news story. This legislation in another example of what can be accomplished when political parties cooperate.

A universal childcare program, much like our public health care system, brings us all a step closer to a fairer, more inclusive Canada.

Richard Cannings is the NDP MP for South Okanagan-West Kootenay.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.