Finance Minister Charles Sousa proposes “major blow” to the province’s craft distillers


Ontario’s craft spirit makers have for some time been fighting an uphill battle to make running a distillery in this province less arduous.

Led in large part by the Toronto Distillery Company, who in 2015 challenged the LCBO on the imposition of taxes on their onsite store that they deemed “unconstitutional,” Ontario spirit makers have been asking the government to amend current archaic alcohol taxation laws to level the playing field.

Finance Minister Charles Sousa just introduced a bill to revamp these tax laws, and it ain’t pretty.

Bill 70, introduced by Minister Sousa on Wednesday, includes a whopping new 61.5% sales tax for stores owned and operated by Ontario’s small and independent distilleries.

In a press release expected to be released today, The Ontario Craft Distillers Association (OCDA) calls the new tax “a major blow to the sustainability of distilleries working to provide Ontario farm-to-table, grain-to-glass spirits” and a move which they say “ignores the lessons of what works and what doesn’t from Ontario’s own wine and beer tax policy.”

The new tax will see distillers paying about ten-times the amount of tax paid on a bottle of Ontario wine.

Noting the recent growth in Ontario’s craft beer industry, the OCDA points to favourable tax laws that helped make that possible, and asks why similar measures can’t be introduced for distillers:

[Beer is] (1) taxed by the litre, as opposed to the brewer’s list price; and, (2) graduated, with a lower rate of 33 cents per-litre for micro-brewers and 80 cents for large brewers. These two taxation principals are what the OCDA advocated for and what the government is rejecting with Bill 70.

Indeed, in a province that many have deemed to have archaic alcohol laws (see: this blog, most of), it would appear the government is particularly ambivalent to the plight of its craft distillers. Way back in 2013 I wrote about the fact that bureaucracy in Ontario actually makes it more cost efficient to export liquor to other provinces than it is to sell it right here in the province where it’s made.  Furthermore, in October the province announced that it would finally allow distillers to deliver directly to LCBOs themselves (a good development) but then continued to apply a 140% mark up to those products–a cost previously justified by said delivery. At every turn, the province appears to be bungling any effort to help small business owners in the spirit industry to actually do business in our province.

Even more so than beer, the spirits industry in this country is absolutely dominated by massive, foreign-based conglomerates. These companies have tons of dough for marketing and lobbying and that, paired with the expenses of opening a distillery, makes it exceedingly difficult to open craft distilleries. A Bill such as the one proposed by Minister Sousa has the potential to be seriously injurious to the future of an Ontario craft distillery industry.

But you can do something:

Write, call, or tweet at your Member of Provincial Parliament and let them know that you want Bill 70 to go to Committee. Having this Bill go to Committee will allow the government to at least receive feedback from stakeholders on this proposed legislation; meaning organizations like the OCDA who are trying to advocate for small businesses in Ontario, will get to have their say on how much this will hurt their livelihood. At least help them get their voices heard, since it seems like no one is really listening.

Here’s the contact info for your Members of Provincial Parliament.

You can also contact the Minister of Finance at:
The Honourable Charles Sousa
Ministry of Finance
7th Floor, Frost Building South
7 Queen’s Park Crescent
Toronto, Ontario M7A 1Y7
Tel: 416-325-0400
Fax: 416-325-0374

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