Wine Growers Canada (WGC), the national voice of Canada’s wine industry, has welcomed the federal budget announcement capping the annual alcohol excise tax adjustment at 2%. An annual indexation of alcohol excise duties against the Consumer Price Index (CPI) would have resulted in a disastrous 6.3% increase in this annual rate.
At a time of record inflation, it would have been difficult for Canadian winemakers to absorb such a tax hike, already facing multiple supply chain challenges and skyrocketing production costs that cannot be overcome by price increases.
Highly subsidized imported wines account for nearly 70% of wine sales in Canada, driving up retail prices for domestic producers.
Excise duty, or production tax, This further worsens the price a consumer pays for a bottle of wine, which includes other taxes, mark-ups and commissions charged by distributors and retailers.
“Wine Growers Canada commends the Government of Canada for its commitment to Canada’s wine industry by placing an inflationary cap on the annual indexation of wine production tax rates,” said Dan Baszkowski, Wine Growers Canada President and CEO.
“But given the economic realities facing winemakers, we call on the government to continue their commitment to Canada’s wine industry by making this inflation cap a permanent measure. The index would have gained about 6.3% this year. “A healthy and vibrant wine and grape industry will bring billions of dollars in economic benefits to local and rural communities through jobs, tax revenues, support for tourism and hospitality, and across the entire wine value chain and grapes,” Baskowski said.