(Pixabay)

Canada agrees to tax homegrown wine in trade settlement

The change is expected to occur by June 30, 2022

  • Jul. 29, 2020 9:10 a.m.

By Carl Meyer, Local Journalism Initiative Reporter, National Observer

B.C.’s wine industry is hoping the Trudeau government can uncork a solution after Canada agreed to reimpose a federal excise duty on domestic bottles as part of a trade dispute settlement.

The British Columbia Wine Institute (BCWI) estimates that the cost of a case of Canadian wine would rise by about $6, if a new provision in Canada’s trade truce with Australia announced Monday comes to pass, following a two-year grace period.

“That’s pretty material to Canadian wine growers and farmers, and so we’re unhappy about that,” said president and CEO Miles Prodan. “We’re in discussions with the feds as well, how can they help us with that.”

International Trade Minister Mary Ng announced on Monday that Canada had reached a “partial agreement” with Australia over its World Trade Organization challenge against Canada’s treatment of imported wines.

As part of the agreement, Canada agreed to repeal a 15-year-old exemption to the federal excise duty that it had been giving to wine produced in Canada and made from entirely Canadian products.

The change is expected to occur by June 30, 2022, according to Ng’s announcement.

Australia’s dispute was launched in January 2018, and includes other concerns, some of which were addressed on Monday that pertain to policies and regulations in Ontario and Nova Scotia.

But the removal of the excise exemption for Canadian wine affects the industry nationwide, Prodan said, not just the $2.8-billion industry in British Columbia.

While he said he was satisfied that the situation was being resolved through a negotiated settlement, as opposed to a WTO ruling, he said it will be a shock to many younger wineries. The BCWI claims 175 wineries as members.

In 2006, the former Harper government, newly elected to power, brought in the exemption for wine made from 100 per cent Canadian-grown products in Budget 2006, meant to give domestic winemakers a competitive edge.

In a statement issued Monday, Wine Growers Canada, the national industry association, said the excise exemption had “supported investment in more than 400 new wineries and 300 winery modernizations” over the 2006-18 period.

“Over half of the wineries that have come on in those 15 years have never (had to) to pay excise tax,” Prodan said. “We’ve grown exponentially in B.C., and arguably all over the rest of Canada … for the last 15 years we’ve built our business on that.”

The Trudeau government tweaked the excise tax in Budget 2017 so it indexes annually to the inflation rate.

WGC said it had made it clear to the government that the industry “requires a commitment to an excise exemption replacement program” given the anticipated financial impact.

Finance Minister Bill Morneau, the group said, had confirmed the government was “prepared to support the wine industry in managing the impacts of this trade challenge,” and was “actively investigating options.”

B.C. wasn’t mentioned in the federal announcement on Monday because it focused on other aspects of the trade dispute that were related to Ontario and Nova Scotia’s treatment of their wine sectors.

Australia’s B.C.-specific concerns had already been addressed, said Prodan, through other trade talks related to the United States-Mexico-Canada Agreement (USMCA).

The USMCA, which is the replacement for NAFTA, included a “side letter” where B.C. had agreed to stop restricting the wine sold on its grocery store shelves to provincial wine only, as of last November.

That policy, which had been brought in by the B.C. Liberals in 2015, forced international wines into “stores-within-a-store.” Monday’s agreement addresses similar issues.

Ontario, for example, agreed to eliminate the tax difference between provincial and non-provincial wine sold at wine boutiques.

“The agreement reflects Canada’s strong commitment to the rules-based international trading system, which is incredibly important for our businesses during these challenging times,” said Global Affairs departmental spokesperson Ryan Nearing.

Like us on Facebook and follow us on Twitter.

Want to support local journalism? Make a donation here.

BC Wine

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

“Let’s break the silence because we can”

Missing and Murdered Indigenous Women’s awareness walk held Saturday in Fort St. James

Rio Tinto responds to U.S. aluminum import tariffs

The tariffs were imposed by President Donald Trump Aug. 6

Brucejack mine fatality identified

Patrick Critch was from Newfoundland

Pretivm Resources reports fatality at Brucejack mine

The isolated incident occurred last Friday, and the employee passed away on Sunday in hospital

QUIZ: How much do you know about British Columbia?

On this B.C. Day long weekend, put your knowledge of our province to the test

Canada to match donations to Lebanon relief

Canada is directing all of its aid for this crisis directly to humanitarian organizations, not the Lebanese government

Famous Yukon-based bhangra dancer brings movements of joy to Long Beach

Infamous dancer is exploring Vancouver Island, visiting the B.C. Legislature and other destinations

Battle of Fairy Creek: blockade launched to save Vancouver Island old-growth

‘Forest Defenders’ occupy road to prevent logging company from reaching Port Renfrew-area watershed

COVID-19 could mean curtains for film and TV extras

Background performers worry they’re being replaced by mannequins on film and TV sets

Laid-off B.C. hotel workers begin hunger strike demanding job protection

Laid-off workers not sure what they’ll do when government support programs end

‘Huckleberry’ the bear killed after B.C. residents admit to leaving garbage out for videos

North Shore Black Bear Society said it was local residents who created a ‘death sentence’ for bear

Researchers find cannabis use in pregnancy linked to greater risk of autism

Researchers caution findings only show association — not cause and effect

Small Manitoba town mourning after well-liked teens killed by tornado

Melita residents feeling profound grief after the deaths of Shayna Barnesky and Carter Tilbury

Antonio Banderas says he’s tested positive for coronavirus

Acclaimed actor celebrating his 60th birthday in quarantine

Most Read