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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.

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About the Author

Dan Albas, Conservative member of Parliament for the riding of Central Okanagan-Similkameen-Nicola, is the Shadow Minister for Environment and Climate Change.

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.



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

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