in our rapidly eroding ability to compete with American distillers
who, on Jan. 1, 2018, obtained significant reductions in U.S. excise
tax on spirits as part of the Trump Administration’s broad tax-reduction
initiative.”
Westcott adds that as the Canadian government reaches in
to take additional money out of distillers’ pockets – money badly
needed to enhance plants, improve the industry’s environmental
footprint, innovate new products, expand export markets and
develop new ones (to take advantage of trade deals Canada has
negotiated) and enhance marketing efforts simply to meet com-petitive
pressures – the U.S. government is putting more money
into the pockets of American distillers.
“Canadian distillers compete directly with larger U.S. dis-tillers
both for packaging contracts, as well as production of
alcohol. This extra money available to U.S. distillers will now be
used to enhance their competitive position, while the resourc-es
available to Canadian plants are decreasing, thanks to the
Canadian government.”
Impact on industry members and consumers
As for how this tax will affect members of these associations and
others, Harford says put simply, the escalator mechanism is bad
tax policy.
“It will happen in perpetuity every spring – without discussion
or votes – forever increasing taxes on Canadian hospitality. What
is unfair for beer consumers is also unfair for the beer industry. Per
capita beer consumption is down in Canada and good jobs in brew-ing
and related businesses are at stake. Eighty-five per cent of beer
consumed in Canada is made here, but that might not continue.”
Harford adds that Canada’s beer economy has dropped from
163,200 jobs to 149,000 jobs. Half of those job losses have been in
COV E R F E AT U R E
“Even without inflation indexation,
Canadian excise duty rates on wine are
already amongst the highest in the world
– more than double the rate of our largest
trading partner, the United States.”
– Dan Paszkowski, President and CEO, Canadian Vintners Association
Photos courtesy of CVA
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