Excise Tax on Local Wines | “It’s like trying to kill an industry”

With the introduction of the consumption tax that the country’s wine producers will take on starting this Thursday, the price increase for glass bottles, the increase that Quebec winemakers will have to pay to the Société des alcools du Québec (SAQ) next year and the labor shortages, the province’s winemakers are “hitting a wall,” forcing many to raise the cost of their product.

Posted at 5:00 am

Nathaelle Morissette

Nathaelle Morissette
The press

“We will see the increase in prices for bottles of wine from Quebec and also for foreign products in the SAQ,” says Matthieu Beauchemin, owner of Domaine du Nival in Montérégie. There are manufacturers who have already started revising their prices. It’s like trying to kill an industry that’s starting to grow. It will be difficult to be competitive,” adds the man who, despite his will, has to increase the cost of his products.

“The cost of dry materials is skyrocketing, the cost of fuel is skyrocketing, we can’t have manpower, and there we have the super excise tax that’s going to hit us in the face from Thursday,” said Quebec Wine Council (CVQ) President Louis Denault. We try to raise prices as little as possible. Here we will close the year with the same price. But it is certain that we will sit down and watch this winter. We can’t record everything, it’s too much. »

federal aid

Wednesday, the day before the excise tax goes into effect, requiring growers to pay $0.33 per liter for products containing no more than 7 percent alcohol and $0.69 per liter for those containing more than 7 percent alcohol Contain alcohol, said the Minister of Agriculture , Marie-Claude Bibeau, announced the creation of the aid program for the wine sector, the contribution of which will be US$ 166 million over 2 years. In return, the consumption tax represents a total of approximately $135 million for 2 years.


PHOTO JESSICA GARNEAU, LA TRIBUNE

Marie-Claude Bibeau, Federal Minister of Agriculture

The tax, which has exempted winegrowers since 2006, came into effect after Australia complained to the World Trade Organization that it believed Canadian producers were benefiting from a competitive advantage. During the Sherbrooke press conference, Minister Bibeau insisted that the announced aid was not specifically intended to counteract the impact of this excise duty, but was also intended to help address other “challenges” such as labor shortages and the many disruptions to the supply chain.

“Several countries around the world have programs to support production, innovation and the fight against climate change,” said Marie-Claude Bibeau. This program is part of a much broader vision. »

A last minute announcement

“The government doesn’t say it, but the announcement is precisely to compensate for this consumption tax there,” believes Louis Denault, also owner of the Ste-Pétronille winery on the Île d’Orléans. “It’s a two-year program. After that you have to pay. »

Mr Denault criticizes that this help comes at the last minute, a day before the tax goes into effect. The funds from the funding program are only paid out to the winegrowers in the autumn, the tax applies from Thursday, at the time of bottling.

“It’s a lot of money. For Quebec alone we’re talking about 1.5 million taxes. We produce 3 million bottles. It’s huge,” says Mr. Denault.


PHOTO EDOUARD PLANTE-FRÉCHETTE, LA PRESSE ARCHIVE

Louis Denault, President of the Quebec Wine Council

Another blow to Québec winemakers: those who sell direct to grocers will have to pay a 43 percent increase in SAQ starting next year, even if they don’t go through the state corporation. This also follows from Australia’s complaint. “Eventually we absorb, we absorb, we absorb, but we have a limit. »

Note that last year, for the first time, the volume of local wine sales in supermarkets, convenience stores and delicatessens exceeded the SAQ. In 2021, 35% of the province’s wine products were sold in grocery stores, 30% in SAQ, 27% in vineyard and 6% in restaurants, according to the crop report published in April by the CVQ.

Winemaker Matthieu Beauchemin, while welcoming any form of support, reminds that the excise duty must be paid “before the winemakers have received the money to sell their bottles”.

And could this bailout be misperceived by Australia, which could again see it as unfair competition? “It is clear that it seems doubtful,” said Geneviève Dufour, a professor at the University of Sherbrooke Law School. “When we enter into an agreement, we must not do indirectly what we must not do directly. It’s not very fancy. »

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