Okanagan Chamber campaigns for lower distillery tax

The goal is to match the excise rate in the U.S. on an ongoing basis

The Greater Vernon Chamber of Commerce’s campaign to have the distilled spirits sector treated progressively and fairly has been endorsed provincially.

Delegates at the B.C. Chamber of Commerce conference in Burnaby May 25 approved a resolution from the Greater Vernon Chamber that calls on the federal government to reduce the excise tax on distilled spirits to $1.77 per litre on the first 150,000 litres of absolute alcohol, and to match the excise rate in the U.S. on an ongoing basis.

“We thank the B.C. chambers for their support and it reflects an interest in businesses not only being treated equitably but also being allowed to reach their full potential as a creator of jobs and a key linchpin in the economy,” said Dione Chambers, Greater Vernon Chamber general manager. “We have worked closely with the Dyck family at Vernon’s Okanagan Spirits Craft Distillery and the Craft Distillers Guild of B.C. and we understand the regulatory challenges they experience, particularly when it comes to competition from the U.S.”

Currently, a distillery in Canada experiences an excise duty of $12.375 per litre of absolute alcohol, which is equivalent of $3.51 per 750-millilitre bottle of spirit at 40 per cent alcohol by volume.

The U.S. lowered its federal excise rate for small distilleries as a catalyst for industry growth and the U.S. rate is now 14 per cent lower than Canada’s on the first 100,000 proof gallons or 200,000 litres of absolute alcohol.

As a result, there are now more than 1,700 distilleries in the U.S., with the sector expanding by a distillery per day. Each distillery employs 20 to 100 people, has a significant spin-off benefit for suppliers and the excise revenue loss has been minimal.

Compounding the situation is that the federal government eliminated the excise tax for Canadian wineries using Canadian agricultural products and there is a tiered system of taxation for breweries based on size.

“Reducing the excise tax would provide existing and new distilleries with funds that could be reinvested into additional equipment, labour, facilities and distribution channels,” said Chambers. “It would also mean additional opportunities for Canada’s agricultural industry as distilleries purchase grains and fruit for alcohol production.”

“We would hope that the federal government hears the collective voice of B.C. chambers of commerce on this issue and takes decisive action to reduce the financial burden on entrepreneurs and promote sustainable economic growth across Canada,” said Chambers.

The resolution will now go to the Canadian Chamber of Commerce with the backing of the B.C. Chamber and the Greater Vernon Chamber can advocate to the federal government with the support of the B.C. Chamber network.

Along with Chambers, the Greater Vernon Chamber was represented at the B.C. Chamber conference by vice-president Krystin Kempton.

Related: Okanagan Valley referenced as “exciting place to travel to drink wine”

Related: How to pair hotdogs with wine: Okanagan sommelier

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