Bill C-657 To Harm Canadian Spirits Manufacturing and Local Farmers

TORONTO, April 16, 2015 /CNW/ - Canadian Distillers encourage MPs to vote against a federal private member's bill that would disadvantage Spirits by providing additional tax relief solely to beer.

Bill C-657 tabled by NDP member for Windsor West, Mr. Brian Masse, would reduce income taxes otherwise payable by profitable smaller Canadian brewers, but ignores the significantly higher tax burden on Ontario and Canadian-made Spirits.

Researchers P. Bazel and J. Mintz of the University of Calgary's School of Public Policy determined recently that 60% of small business tax deductions in Canada benefit households with more than $200,000 in annual income.

When measured on an "apples-to-apples" basis, or standard drinks[1], current beer excise rates in Canada are already less than half the rate imposed on spirits for exactly the same amount of alcohol. In addition, smaller beer producers already benefit from further excise tax rate reductions as high as 90%.

"The Windsor area is the home of two historic Spirits distilleries, producing world-class Canadian Whiskies made from corn sourced locally across Essex, Lambton and Kent Counties ", explained Jan Westcott, President & CEO of Spirits Canada. "It is disappointing to see a local MP put these distillery jobs at risk by suggesting an income tax cut that would exclude local distillers faced with exponentially higher overall tax rates".

A reduction in Canadian Spirits excise duty rates to the current beer rate, on the other hand, would provide an additional $300 million annually to Canadian Spirits manufacturers, a reinvestment that would help raise Canadian Whisky's international profile to that of Scotch Whisky and American Bourbon.

Quebec's expert Commission on Fiscal Measures recommended last month that the Government of Quebec abolish its provincial alcohol specific tax rate reduction provided to micro-brewers and other smaller-scale alcohol producers as such tax breaks are 1) contrary to the very basic principle of market neutrality, 2) provide advantages to a select group of producers or investors versus those operating in other sectors of the economy and 3) are inconsistent with the policy objective of accounting for the external costs associated with the misuse or abuse of alcohol with such externalities being the same regardless the size or the particular producer.

"By limiting the tax break solely the Canadian brewers, contrary to Canada's international trade obligations, Bill C-657 would put the Spirits Industry's $600 million in annual exports at direct risk of trade retaliation", further lamented Mr. Westcott.    

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[1] A standard drink in Canada is defined as a serving of alcohol containing 17.05 ml of pure alcohol, whether consumed as a 341 ml bottle of 5% abv beer, a 5 ounce glass of 12% abv wine, or a cocktail containing 1½ ounces of 40% abv spirits.

SOURCE Spirits Canada

Jan H. Westcott, President & CEO, Spirits Canada, Cel. 416 707 8851