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Member of Parliament

Richard Cannings

  • Member of Parliament
  • Member of Parliament
  • NDP
  • South Okanagan—West Kootenay
  • British Columbia
  • Voting Attendance: 61%
  • Expenses Last Quarter: $128,729.57

  • Government Page
Context: House Hansard - 171 - Mar/22/23
Mr. Richard Cannings (South Okanagan—West Kootenay, NDP)
  • Mar/22/23 9:12:18 p.m.
  • Watch
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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