QUESTION PERIOD — Finance
Wine Excise Tax
March 26, 2021
Honourable senators, my question is for the Government Representative in the Senate.
Senator Gold, as you may remember, recently in this chamber I highlighted the issues facing the domestic wine industry in relation to the repeal of the excise tax exemption that is slated to take place in June 2022.
The return of the excise tax could have a devastating impact on local grape growers and winemakers in Ontario, British Columbia, Quebec and Nova Scotia. These businesses have become a source of tremendous pride in small communities. They have also impacted many of these small communities economically, as they provide over 37,000 jobs, many of which can be found in areas where job opportunities are scarce.
The exemption has had an enormous effect on the sector’s ability to grow and compete against dominating international companies. In 2006, there were 86 VQA wineries in Ontario. Today, there are 183. That means 97 Ontario wineries face the payment of excise duty for the first time ever.
During an already difficult year, small- and medium-scale operations are struggling to survive as we navigate the ongoing pandemic, and are deeply concerned about the impending changes to the excise tax exemption, which could affect their ability to survive.
Without an effective replacement program that specifically focuses on 100% Canadian-produced wine, Canada is at risk of losing these small businesses that have become crucial engines of our local economies. While going without a replacement program would be devastating, implementing one that gives the dominating international companies back-end access to Canadian taxpayer dollars would defeat the purpose of a creating a replacement program in the first place.
With the hopes of receiving a more fulsome response, Senator Gold, I provided this question to you in advance. Now I ask, on behalf of those business owners, will the government create a trade-safe excise tax replacement program that focuses specifically on supporting 100% Canadian-produced wine?
Thank you for your question and for advance notice of the subject matter.
As senators may appreciate, the origin of the dilemma and challenge is rooted in Australia’s complaint to the World Trade Organization regarding federal and provincial measures allegedly inconsistent with the GATT, General Agreement on Tariffs and Trade, which dates back, as you know, many decades now. The government has worked closely with provinces — and, of course, with the industry — to develop an agreement that settled many aspects of this challenge.
With regard to how the government will go forward to support Canadian wine producers, I do understand that there have been stakeholder submissions to Agriculture and Agri-Food Canada for various support programs. The government, I am advised, is considering these proposals to support the sector as it adjusts to these challenges.
The government hears the industry’s concern about the uncertainty and will continue to work with stakeholders. I do not have a specific answer to your question. The government is considering all options to support this important industry.
Senator R. Black, did you have a supplementary question?
No, thank you, Your Honour.
