Federal taxes hurting B.C. wineries and craft brewers

Alcohol tax hike in April

Federal tax hikes are hitting a crucial industry in British Columbia at the worst possible time.

The alcohol industry across B.C. has had a tough couple months. Between forest fires, droughts and cold snaps, wine-growers and craft brewers will have a harder time turning a profit this year. And Prime Minister Justin Trudeau is about to make things even worse.

In April, (his government) will hike federal taxes on beer, wine and spirits by almost 5%. Taxes already account for about half the price you pay for alcoholic beverages. That means every time you buy a bottle of wine or a six-pack of your favourite craft beer, you’re also buying one for the taxman.

To add insult to injury, the tax hike is automatic, meaning our elected MPs won’t vote on the increased taxes on wine and other alcoholic beverages.

Back in 2017, the federal Liberal government introduced a tax escalator on alcoholic beverages. The escalator means the taxes on beer, wine, ciders and spirits go up automatically every year, without a vote in Parliament.

Regardless of your views on alcohol, it’s wrong for the government to hike taxes without letting the democratic process weigh in. The government shouldn’t be jacking up taxes on a struggling industry, especially not without letting our elected representatives voicing their concerns by actually voting on the hike.

Wine producing is an important industry in B.C., with more than 12,000 people across every region of the province employed in it. It creates more than $3.75 billion for the provincial economy. Almost 1.2 million tourists visit B.C. wineries every year. There are 341 separate wineries in our province alone, with hundreds more wineries across the country.

While taxes on B.C. VQA wines are less than the taxes on non-VQA wines, VQA wines only make up around 19% of sales. Local non-VQA wines in B.C. are the type of wine most frequently sold in the province.

Craft beer is also a big driver of the local economy. There are more than 200 craft breweries in B.C. alone, which made almost $230 million in revenue in 2020. Around 4,500 people are employed by craft breweries in B.C. And more than 95 per cent of wineries, breweries, cideries and distillers in B.C. are small businesses.

A majority of the 1,100 craft breweries in Canada are in rural areas, where they are important employers. It’s wrong for small businesses in rural communities to be picking up the bill for big-spending politicians in Ottawa.

Small businesses selling alcoholic beverages are also going to pay the tab for the government's tax binge. Think about all the pubs, bars and restaurants that make ends meet by selling beverages to thirsty British Columbians.

Instead of hitting the gems of our provincial economy with automatic tax hikes, we should be supporting those small mom-and-pop brewers and pubs to ensure they can keep employing thousands of British Columbians and pumping billions into our economy.

Credit where credit is due, some federal politicians—like (Kelowna-Lake Country Conservative) MP Tracy Gray in Kelowna have been vocal in their opposition to the escalator tax. But that’s falling on deaf ears in the prime minister’s office.

Trudeau has a habit of saying his government is working to make life more affordable, but tax hikes do just the opposite. If he really wants to help the little guy get ahead, his government wouldn’t be hiking taxes on small businesses and families.

Carson Binda is the B.C. director for the Canadian Taxpayers Federation.

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