44th Parl. 1st Sess.
March 22, 2023 01:00PM
- Mar/22/23 2:09:29 p.m.
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Mr. Speaker, after eight years of a Liberal government, groceries, gas and home heating are getting more and more expensive. If that were not bad enough, on April 1 taxes on gasoline are going up 14¢ a litre, while the escalator tax on wine, beer and spirits is also set to rise by 6.3%. That is no cruel April Fool's joke. In Niagara and across the country, these taxes will punish wineries, craft breweries, distilleries and anyone who enjoys consuming these wonderful Canadian-made products.
There are serious consequences to the government spending the cupboards bare while leaving Canadians with the expensive bills to pay. What will happen to the much-vaunted federal tourism growth strategy, and what of the wine sector support program? Our tourism operators, grape growers and wineries deserve so much better from the government.
It is time for the tired Liberals to step aside so a Conservative government can lead and create the changes needed such that Canadians can finally get ahead.
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- Mar/22/23 2:58:47 p.m.
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Mr. Speaker, it is not a climate plan. It is a tax plan. He has not met a single emissions target since he became Prime Minister. All he has managed to do is suck more money out of the pockets of Canadians. It is enough to make a man drink, but he is taxing that too.
I have in my hands a letter from Canadian breweries workers. These are union workers who say Canada is experiencing the highest cost-of-living increases in a generation. This is squeezing family budgets and making workers in the brewery sector nervous about their jobs. They are calling on the Prime Minister to cancel his planned tax increase on beer and spirits. Will he listen to these union workers and cancel the tax hike?
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- Mar/22/23 8:28:08 p.m.
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Madam Speaker, I will just point out quickly, and I may be answering the previous question for him, that I do not think cideries and alcoholic beverages made from berries pay excise tax. That is my understanding.
I would like to ask the parliamentary secretary what the government will be doing to make the excise tax writ large more fair for Canadians who have to compete with American companies, which have a much lower excise tax? Especially for small producers, small distilleries and breweries, it really puts them out of the market in terms of competition with those companies.
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- Mar/22/23 8:58:20 p.m.
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Madam Speaker, I have a question and a comment from the Rheault Distillery in the riding of Algoma—Manitoulin—Kapuskasing, in northern Ontario. A minister said that there is a graduated system for the excise tax on beer, but as the member is well aware, the reality is that the government forgot about small distilleries. No matter what volume is produced, whether it be 1,000 litres or a million litres, all distilleries pay the same tax.
Does the member agree that the graduated system that is used for breweries should also apply to distilleries?
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- Mar/22/23 8:59:42 p.m.
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Madam Speaker, as a proud resident of Abitibi-Témiscamingue, I can say that microbreweries are at the heart of our identity.
Whether we choose the Foublonne or Brother John from Trèfle Noir in Rouyn‑Noranda, the stout from Pierre de fée in La Sarre, the Blonde du Frère Moffett from Barbe Broue, in Ville‑Marie, and in Témiscamingue, the Tête de Pioche from the Prospecteur in Val‑d'Or, or simply a beer from a Quebec microbrewery we can pick up at the Chez Gibb cornerstore, there is always a way to have a drink from Abitibi‑Témiscamingue. We even have very good wines produced by the Domaine des Duc. The member for Joliette has even tasted it.
The Conservatives' motion essentially replicates the recommendation in the pre-budget consultation report of the Standing Committee on Finance that called on the government to freeze the federal excise tax on beer, spirits and wine at the 2022 rates for the 2023 and 2024 fiscal years until inflation returns to the Bank of Canada's target range, somewhere between 1% and 3%.
The excise tax on alcohol is a fixed amount by volume. Traditionally, that amount has been occasionally reviewed in a budget implementation bill. Since 2017, the law has set out an automatic escalator formula based on the consumer price index. As a result, the excise tax will go up 6.3%, reflecting the high level of inflation we experienced in 2022.
We will therefore be supporting the Conservative motion because, in the midst of this inflationary surge, hiking a consumption tax that would further increase prices would be ill-advised.
That said, admittedly, the impact of the alcohol excise duty escalator on the final selling price of the product will be rather minimal. We are talking about 1¢ per can of beer.
This motion is not a real response to the inflationary pressure on food prices. Moreover, only the big brewers would truly benefit from the adoption of this motion. Regional microbreweries pay only a fraction of the excise tax and will therefore benefit much less from the tax rate freeze.
In fact, thanks to pressure from the Bloc Québécois in 2006, it is only after 75,000 hectolitres that a microbrewery pays the full tax rate. Under that amount, the cost varies between 10% and 85% of the value of the tax depending on the number of hectolitres produced.
Of the 1,200 breweries in Canada, including the more than 300 in Quebec, only 12 pay the full amount of the excise tax on the majority of their production. Most of these 12 breweries are owned by foreign multinationals.
There are other ways to help microbreweries and their brewmasters, who introduce us to new flavours. For example, the government could exempt microbreweries from paying the tax on the first 10,000 hectolitres, as recommended by the Canadian Craft Brewers Association. In fact, 80% of microbreweries produce less than 2,000 hectolitres per year.
The regulations on the excise tax and its escalator based on capacity made it possible for many craft microbreweries to expand, but the 75,000-hectolitre threshold is now a barrier to their growth, according to the Canadian Craft Brewers Association, which I salute. Another solution that would help our local businesses compete against the big breweries would be to raise the threshold while keeping the rate brackets.
One of the positive aspects of the 2022 spring budget was the excise tax exemption for producers of cider and mead, such as Mieillerie de la Grande Ourse de Saint‑Marc‑de‑Figuery. I salute the member for Joliette for waging and winning this battle. His example should be followed and should provide further inspiration to the government today.
However, the government still has a very restrictive definition of what constitutes cider and mead. Producers who flavour their products with berries or aromatics continue to pay the tax. The Bloc Québécois hopes that all of this will be resolved in the upcoming budget.
We also hope that the excise tax exemption will apply to producers who make wine from other types of fruit, such as blueberries, which promote our region.
In Val‑d'Or, in the riding of my neighbour from Abitibi—Baie-James—Nunavik—Eeyou, there is a a company that specializes in producing distilled beverages. Spiritueux Alpha Tango produces Bravo Charlie and Echo Foxtrot gin, Valentine amaretto, Mission Kosmos vodka and even Mayday liqueur, which is made of black spruce and cinnamon. I want to say that Quebec's microdistilleries are on an impossible mission to the cosmos and that their mayday signal is not receiving an answer from the government. That is a problem. Even their gin is made using cattails. There is something interesting and inspiring about that.
With the excise tax at over $12 per litre of alcohol, a bottle of Alpha Tango gin will cost 25¢ more. That is not a catastrophic increase, but it is in addition to the general increase in prices. As the saying goes, it takes four quarters to make dollar.
The Bloc Québécois would have proposed a different solution than the Conservatives. We need to duplicate the microbrewery model for microdistilleries and impose only a fraction of the tax that is charged to industry giants. That way, a bottle of Grande dérive, from Miellerie de la Grande Ourse, would cost $3 less per bottle instead of the meagre 25¢ being discussed today. This would apply to all those small, local producers who give us a taste of their regional expertise.
I sincerely hope that the government will listen to this suggestion. It would allow our flavour artisans to benefit from a more targeted measure. Nevertheless, I repeat, we will support the Conservative motion because its merit lies in the message that the House is sending to the government.
That being said, the solution to inflation is not simply a measure like this. Microbreweries in Abitibi-Témiscamingue have a long list of problems. In early February, Le Trèfle Noir, a source of pride in Rouyn Noranda, sold its recipes to Lagabière, a microbrewery in Saint-Jean-sur-Richelieu. Owner Alexandre Groulx, whom I commend, said that inflation, the pandemic and the labour shortage led him to sell part of his business.
Our entrepreneurs need more than a band-aid solution. They need concrete solutions. We must ensure that our farmers benefit from measures to help them produce, in particular by creating a special emergency account similar to what was done during the pandemic, which would help ensure they are supported when they need it. There is a significant cash flow crisis within the farming community. Obviously, these are the raw materials used by our microbreweries and microdistilleries. We also need to address the labour shortage in all our regions and the housing crisis.
These two problems are hindering the economic development of Abitibi—Témiscamingue. Some measures do exist, including a tax credit for returning recent graduates, a tax credit for immigrants who choose the regions of Quebec, tax incentives for experienced workers, increased transfers for the creation of social and community housing, and so on. The Bloc Québécois has solutions. We need the government to listen. With the budget only one week away, I hope it is listening.
In conclusion, I invite all parliamentarians to support local microbreweries and microdistilleries, especially those in Abitibi—Témiscamingue. They will see that our products are full of local flavours, and I am sure they will become their favourites. Above all, they will have to enjoy them in moderation.
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- Mar/22/23 9:07:27 p.m.
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Madam Speaker, I have to agree with the member on the subject. Beyond capping this escalator tax, we really should be looking at restructuring the excise tax, especially for spirits.
We also have the craft breweries of Canada asking for that, even though they have the staggered rise in excise tax based on how much they produce. It is way more than breweries or distilleries are paying in the United States, for instance.
Could the member comment further on that? This is something that should be looked at. The distillers in my riding are very concerned about the unfairness of the way the excise tax for spirits is calculated today.
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- Mar/22/23 9:09:55 p.m.
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Madam Speaker, 88% of the beer Canadians enjoy is brewed and created here in Canada by over 20,000 hard-working Canadians employed by these breweries, whether microbreweries or large breweries like Pacific Western Brewing in my town of Prince George. They are worried. The unions are worried and labour is worried. The breweries are saying they cannot handle a 6% tax increase.
I want to ask if my hon. colleague is hearing the same in his riding as we are hearing, if the breweries are saying the same things. Maybe he has some more stories he can tell us about how these breweries are just worried about the next day and whether or not they are going to be able to keep the doors open.
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- Mar/22/23 9:12:18 p.m.
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Madam Speaker, I will be sharing my time with the wonderful MP for Elmwood—Transcona.
My riding of South Okanagan—West Kootenay is the finest in the country in many ways, but one of its best features is the thriving beer, wine and spirits sector. I think everyone here knows that we make the best wine in Canada, but we might be here all night if I were to list all of those wineries. Perhaps fewer know the sheer number and quality of craft breweries, so I would like to try to list them here, with apologies if I miss any. Abandoned Rail, Cannery, Highway 97, Neighbourhood, Slackwater and Tin Whistle are all in Penticton. There is also Firehall in Oliver, North Basin in Osoyoos, Rossland Beer in Rossland, Trail Beer Refinery in Trail, and Tailout Brewing in Castlegar.
Then there are the distilleries. We have Legend Distilleries in Naramata. It used to be my old doctor's office, but it has been turned into a distillery. We have Maple Leaf Spirits and Old Order in Penticton; Dubh Glas in Oliver, where my friend Grant Stevely makes what I think is the best gin in Canada, Noteworthy Gin; Tumbleweed in Osoyoos; Kootenay West in Trail; Tonik in Crescent Valley; and Kootenay Country Craft in Winlaw. There may be more. It is hard to keep up.
I was recently talking to my friends Jorg and Anette Engel, who own Maple Leaf Spirits, which is a small craft distillery in Penticton. It is one of the first craft distillers in the region, and they have taken advantage of the bountiful fruit of the Okanagan to produce award-winning brandies and other liquors. In fact, their brandy won the award for best brandy in Canada last year for the second time. As their business grew over the past 20 years, they saw other small distilleries establish in the region, and that strong growth in the craft distillery sector has been mirrored and even exceeded by the growth in the number of breweries and small wineries. This sector is therefore particularly important in South Okanagan—West Kootenay.
These businesses, many of them small family-owned companies, have combined two traditional pillars of the local economy, agriculture and tourism, to create a powerful new centre of growth for the region. However, like many sectors, this sector has been hard hit recently by soaring inflation. The cost of almost everything that goes into their products has been rising. The grain that goes into beer and spirits has more than doubled in price. The price of bottles has gone up. They also share another inflation-related challenge that no other sector has to deal with, and that is an excise tax that automatically rises as inflation rises. Since 2017, this tax has gone up every year without legislation or parliamentary debate, and this year it will increase by a whopping 6.3%, the largest one-year increase in the last 40 years.
Distillers like that of the Engels are going to be struggling to survive. They recently wrote me a letter, and I would like to read some of it here:
Our locally produced Craft liquors are more expensive in liquor stores than imported and multi-national brands, through the Federal Excise Tax. The rates of excise duty on spirits are adjusted annually on April 1st, based on changes to the Consumer Price Index. As a craft distillery, we now pay $1.74 in excise tax for each 375ml bottle.... That is $3.48 for each 750ml bottle, or $5.22 for each 1 liter bottle. Here in Canada, Excise is further more than doubled by 167% provincial mark-ups, to burden domestic distillers with a tax barrier of approximately $9 on every 1 liter bottle in a liquor store, increasing every year. In liquor stores, our products compete with liquor from the USA, who have reduced their excise tax to a fraction of what we must pay. We see an imbalance on the market. We want our products to get priced in liquor stores on a level playing field with products coming from out of country.
These concerns are shared with other distillers across the country. Marcel Rheault and Mireille Morin own Rheault Distillery in Hearst, Ontario. They have very similar concerns. They make Loon Vodka and other great products. They say they have to remain competitive, so they cannot mark up their prices to keep their margins intact. Again, this is echoed across Canada in every craft distillery, every craft brewery and every small winery in the country.
I want to be clear that all of these businesses are fine with paying the excise tax on beer, wine and spirits, but they are concerned about the fairness of how this tax is now structured and calculated. On top of the escalator feature, excise taxes on alcoholic beverages produced in Canada are treated differently depending on whether they are wine, beer or spirits, and very differently when compared with excise taxes levied by our biggest trading partner, the United States.
Excise taxes are much lower in the United States and are structured so that small producers pay much less, on a sliding scale, than bigger producers. In Canada, only the beer excise tax is scaled that way, by the size of the operation, but the average tax here is still much higher than it is in the United States. It is twice that, and the independent craft brewers of Canada would like to fix it.
One issue is the federal definition of a craft brewery, which is a brewery that produces less than 75,000 hectolitres of beer per year. If a brewery makes more beer than that, it pays the full excise tax. However, there are different definitions. In Alberta and Saskatchewan, the definition of a craft brewery is one that produces less than 400,000 hectolitres, and in the United States the definition means seven million hectolitres. That is what they consider a craft brewery south of the border. It is clear that it would be helpful for Canadian breweries if these definitions and regulations were synchronized as much as possible so that competition is as fair as possible. Craft brewers have put forward a reasonable suggestion to the government that would do just that, and I urge the Minister of Finance to consider it seriously.
The wine sector is in a special situation because most wineries in Canada never had to pay excise tax until last year, when Canada eliminated an exemption for wines made from Canadian grapes after a trade dispute with Australia. After strong lobbying from the wine industry, the federal government did step up with a support program to help wineries adapt to this new reality, but that support is set to disappear next year. The excise tax will continue after next year, of course, so it makes sense that a more long-term solution is needed.
Craft distillers are the hardest hit in many ways. As I mentioned earlier when reading the letter from Maple Leaf Spirits, the excise tax on a one-litre bottle is $5.22, and when we add provincial taxes, that goes up to about nine dollars. This makes it very difficult for local producers such as Jorg and Anette Engel to compete with imports from other countries that are taxed at a fraction of that rate. We need a similar restructuring of the excise tax on spirits to level the playing field.
These are all reasonable, common-sense recommendations, and I know from experience that the government will sometimes listen to such recommendations and make the right decisions. When the beer industry came to me last year and pointed out that de-alcoholized beer was being charged an alcohol excise tax, I put forward a private member's bill that would remove that tax. To its credit, the government included that provision in last year's budget, so it can be done.
The House of Commons finance committee has recommended that the government freeze the excise tax rate at 2022 levels for at least the next two years, and I hope the government takes up that advice for the budget coming next Tuesday. I also hope it will listen to Canadian producers of beer, wine and spirits and restructure the excise tax to make it fairer for small producers so that this sector can continue to make fine products and make a very important contribution to our local economies.
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- Mar/22/23 9:21:43 p.m.
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Madam Speaker, I appreciate our hon. colleague's speech, because for the first four minutes he entered into Hansard the names all the microbreweries and breweries in his riding. I think he owes a care package to all member who are currently present in the House.
When the escalator tax was introduced and brought in back in 2017 before COVID, Finance Canada officials testified at committee that the Liberals did no modelling on how this tax would impact small businesses and breweries all across our country. Why does the government continue its mismanagement of monetary policy? Is the member hearing the same as what we are hearing? Perhaps he has some suggestions on what the government can do to scrap the tax and make things more affordable for Canadians.
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- Mar/22/23 9:24:14 p.m.
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Madam Speaker, I would like to thank my friend and colleague from South Okanagan—West Kootenay for being an advocate for the wineries and small craft breweries in his riding. I have two breweries in my riding. Orange Snail and Third Moon are both awesome. They do a lot in our community. Andrews Farm produces wine as well, and we have strong connections to Pelee Island in Milton. That is a great Ontario winery.
This is all about balance, as my hon. colleague pointed out. It is not a matter of just scraping a tax all at once; I think that would be irresponsible. Consumption has an impact on the health care system, so we have to consider those ramifications.
On the topic of balance, how does my hon. colleague suggest we approach that? What would be reasonable? I agree with him that a 6.3% increase to the excise tax is not reasonable to ask our breweries, vineyards and spirit producers to shoulder. What would be appropriate?
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- Mar/22/23 10:29:06 p.m.
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Mr. Speaker, I come from New Westminster—Burnaby, the heart of some of the best breweries and wineries in all of Canada. I will mention the award-winning Steel and Oak Brewing Co.; Another Beer Co., or ABC, which has terrific products; the Dageraad Brewing in Burnaby, which has a lot of innovation in its products; and Pacific Breeze Winery, which provides excellent wines.
There is no doubt that the tax increase would have a big impact. The government is aware of this. We have been speaking of this for hours. The simple question is this: Why will the government not stop the price increase? Why will it not just halt it, so that it does not increase on April 1?
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