Canada’s wine industry could be getting a tax boost from the federal government this winter, if support on Parliament Hill is any indication.
The Canadian Vintners Association, representing grape growers and vintners from British Columbia to Nova Scotia, last week won support from both the House of Commons finance and agriculture committees for an exemption from excise duties on much of the production from Canadian grapes for purely Canadian wine.
President William Ross, a former senior Agriculture Canada official, told MPs it would cost Ottawa less than $8 million a year and would lead to more Canadian wine production and the planting of more and better vines in the key wine producing provinces of B.C., Ontario and Nova Scotia.
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He said the Canadian wine industry employs 8,000, has retail sales of $1.2 billion and contributes $750 million in tax revenues.
Yet it receives no government subsidies and competes against subsidies and preferential treatment enjoyed by wine industries in other countries, including the United States, the European Union and Australia.
“We are a poster child for the agricultural policy framework,” Ross told the agriculture committee Dec. 14. Canadian vintners add value, produce environmentally sustainable products, create employment and produce a “Canada brand” product.
Yet they face unfair competition from foreign subsidized product and an excise tax that importers do not face.
The vintners group’s proposal, which the agriculture committee endorsed, was for an exemption on excise tax on totally Canadian wine on the first 500,000 litres from a vintner and then phasing in the tax to 51.2 cents per L after 900,000 L of production.
The finance committee suggested just the first 400,000 L should be exempt.
Ross said the excise tax relief could be worth $25,000 to a small vintner producing 50,000 L annually: “very small, but it would be very important to that business, the difference between surviving or not, reinvesting or not.”
The tax exemption would affect only those making wine wholly from Canadian grapes.
Ross also insisted that the industry is not asking for a subsidy.
“We’re not asking for support or tariff protection,” he said. “We’re asking that they take a little less.”
The plea won broad support on Parliament Hill, but he test of success will be when the federal budget is presented in the winter.
Alberta Liberal David Kilgour said that while the nonsubsidized wine industry paints itself as a poster child for the federal APF, “it should be the poster boy for what is wrong with Canadian agriculture policy.”
An industry that is competitive, not subsidized and facing foreign subsidized product is subject to a punitive Canadian tax.
“This is wrong,” Kilgour said.
