(Photo courtesy of Wolfhead Distillery)(Photo courtesy of Wolfhead Distillery)
Windsor

Natyshak Goes On The Attack Over Distilleries Tax

Just as Ontario's craft distillery industry picks up steam, Essex MPP Taras Natyshak says a new tax will crush it.

Under Bill 70, introduced by Finance Minister Charles Sousa, stores owned and operated by craft distilleries will face a 61.5% tax rate. The Ontario government engaged the industry in talks for three years before the bill was introduced this past fall.

The Ontario Craft Distillers Association says it had hoped for a graduated tax based on volume, much like what the craft beer industry enjoys. It is also critical of the changes stating in a release the day after the bill was presented that the government has ignored "the lessons of what works and what doesn’t from Ontario’s own wine and beer tax policy, as well as the successful spirits tax policies in places like British Columbia."

In British Columbia, craft distilleries pay no provincial tax on their first 50,000 litres sold, and taxes are phased in up to 100,000 litres.

Natyshak says the changes will make the industry unsustainable.

"Charles Benoit of the Toronto Distillery Company said that his distillery will be closing on January 31 if Bill 70 passes," he told the legislature. "Other Ontario craft distillers are looking to sell their products internationally, instead of right here at home because it doesn't make sense financially."

Sousa says his government is still consulting with distillers, but spirit makers will make more not less money.

"We are improving the supplier's margins here from 39% [per bottle] to 45%," he says.

The distillers association says the craft beer boom was possible because Ontario beer tax is taxed by the litre instead of the brewer's list price, and graduated with a lower rate for micro-brewers than large brewers. It says graduated taxation is necessary for small producers who lack economies of scale.

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