(Pixabay)

(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

The Okanagan Regional Library is holding a pair of online contests for its young readers. (File photo)
Okanagan Regional Library challenges young readers

Pair of contests online aimed at kids aged up to 18

A water outage to fix a hydrant valve is scheduled for Lake Country on Tuesday, Jan. 26, from 9 a.m. to 2 p.m. (District of Lake Country image)
Lake Country water outage planned

Affects 20 properties on Seaton Road between Read Road and Chase Road from 9-2 Tuesday, Jan. 26

Kelowna Fire Department. (FILE)
Early morning downtown Kelowna dumpster fire deemed suspicious

RCMP and the Kelowna Fire Department will conduct investigations into the cause of the blaze

Terrance Josephson of the Princeton Posse, at left, and Tyson Conroy of the Summerland Steam clash during a Junior B hockey game at the Summerland Arena in the early spring of 2020. (John Arendt - Summerland Review)
QUIZ: How much do you know about hockey?

Test your knowledge of Canada’s national winter sport

(Hal Brindley - Dreamstime)
Enderby farmers caught between coyotes and bylaw tickets

The Smith family is stuck in a Catch-22 between protecting their livestock and incurring noise complaints

U.S. Senator Bernie Sanders sits in on a COVID-19 briefing with Dr. Bonnie Henry, provincial health officer, and Adrian Dix, B.C. minister of health. (Birinder Narang/Twitter)
PHOTOS: Bernie Sanders visits B.C. landmarks through the magic of photo editing

Residents jump on viral trend of photoshopping U.S. senator into images

Auldin Maxwell stacks the 693rd block on the top of record-breaking Jenga tower on Nov. 29. (Submitted)
Salmon Arm boy rests world-record attempt on single Jenga brick

Auldin Maxwell, 12, is now officially a Guinness world record holder.

A woman injects herself with crack cocaine at a supervised consumption site Friday, Jan. 22, 2021 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Drug users at greater risk of dying as services scale back in second wave of COVID-19

It pins the blame largely on a lack of supports, a corrupted drug supply

Wet’suwet’en supporters and Coastal GasLink opponents continue to protest outside the B.C. Legislature in Victoria, B.C., on Thursday, February 27, 2020. THE CANADIAN PRESS/Chad Hipolito
‘We’re still in it’: Wet’suwet’en push forward on rights recognition

The 670-km Coastal GasLink pipeline was approved by B.C. and 20 elected First Nations councils on its path

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Jennifer Cochrane, a Public Health Nurse with Prairie Mountain Health in Virden, administers the COVID-19 vaccine to Robert Farquhar with Westman Regional Laboratory, during the first day of immunizations at the Brandon COVID-19 vaccination supersite in Brandon, Man., on Monday, January 18, 2021. THE CANADIAN PRESS/Tim Smith - POOL
Top doctor urges Canadians to keep up with COVID measures, even as vaccines roll out

More than 776,606 vaccines have been administered so far

From the left: Midway RCMP Csts. Jonathan Stermscheg and Chris Hansen, Public Servant Leanne Mclaren and Cpl. Phil Peters. Pictured in the front are Mclaren’s dog, Lincoln and Peters’ dog, Angel. Photo courtesy of BC RCMP
B.C. Mounties commended for bringing firewood to elderly woman

Cpl. Phil Peters said he and detachment members acted after the woman’s husband went to hospital

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Dr. Jerome Leis and Dr. Lynfa Stroud are pictured at Sunnybrook Hospital in Toronto on Thursday, January 21, 2021.THE CANADIAN PRESS/Frank Gunn
‘It wasn’t called COVID at the time:’ One year since Canada’s first COVID-19 case

The 56-year-old man was admitted to Toronto’s Sunnybrook Health Sciences Centre

Most Read