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period– would raise just $545,000 in net annual federal taxes, but
a total economic impact loss of $87.3 million due the reduction of
Canadian wine sales.
Tax is nothing new
Yet, this nearly identical tax mechanism is nothing new, says Jan
Wescott, president and CEO of Spirits Canada, a Toronto-based
association representing Canadian distillers and a leading pro-ponent
for the encouragement of moderate and responsible con-sumption
of beverage alcohol for those adults who choose to drink.
“We had it during the 1980s and it had a devastating impact
on the Canadian distilled spirits business. Then Finance Minister
Allan McEachen introduced excise indexation in his February
1980 budget, and Michael Wilson ended the policy in his May 1985
budget. As a result of this tax policy – which is virtually the same
as current Minister of Finance Bill Morneau’s policy – the industry
closed 11 distilleries across the country. The measure effectively
wiped out all of the mid-sized distilleries (as well as a couple of
large distilleries) in Canada as declining sales forced the indus-try
to radically consolidate. Distilleries were shut down in BC,
Saskatchewan, Ontario, Quebec, New Brunswick and Nova Scotia.
Thousands of Canadians lost their jobs as the industry shrunk.”
Westcott says the Canadian spirits industry is very proud
of the fact that 100 per cent of its grain needs are sourced
from Canadian farmers. This provides important sales for wheat,
rye, corn and barley farmers in Alberta, Manitoba, Ontario
“Canadian distillers are the largest single purchaser of rye
grain in Canada and large purchasers of corn in several provinces.
For instance, the Grain Farmers of Ontario report that spirits are
the fourth largest corn purchaser in Ontario.”
When asked what his specific criticisms are about this tax,
Westcott doesn’t hold back.
COV E R F E AT U R E
Courtesy of Beer Canada
“First, the automatic annual nature of the tax operates regard-less
of the prevailing economic conditions or developments in
the country and across the beverage alcohol industry. In fact, we
are seeing precisely the perverse effect of this automatic feature
WINTER 2019 § POURED CANADA § 9