Dear Editor:
An open letter to Wellington-Halton Hills MPP Ted Arnott.
Two years ago you came into the Elora Distilling Company during the election campaign and I told you of the immense struggles facing the distilling industry. You told me to write it down and send it to you. You forwarded it to Premier Doug Ford and nothing happened.
We just finished our best season ever; sales were fantastic and all the profit went to the government – 52 per cent of the price of our product sitting on the shelf in our store is tax.
Small distilleries are being crushed under a tax system built for multinationals producing million-litre batches not hundred -litre batches
We pay a spirits tax to the provincial government which is 61.5% (of our original price) and excise duty to the federal government, which is up to 20%, and then we pay 13% HST on those taxes.
If we are lucky to get our product on the shelf at the LCBO, which is very hard, we give up 72% of the price to the government. We can only charge so much and then people won’t buy our products.
These tax rates come from a long history between the government and the large producers (think names like Smirnoff, Bombay Saphire, Crown Royal and Bacardi’s).
The craft movement struggled to get going in Ontario because the government and big business had a solid relationship. A monopoly of production and distribution that is wrapped up in a story that this is what’s best for Ontario. Small producers were shut out until the government was sued in 2009. Craft distilling finally started here but it was a grudging introduction.
As a small firm making our products with local ingredients by hand from day one, we have paid the same tax rate as big multinational companies that are producing millions of litres a year (e.g. the new Crown Royal plant near Sarnia will produce up to 20 million litres a year).
Beer and wine producers in the province don’t suffer this crushing system. They are on a graduated scale; hardly any tax at the start and more as you go.
In BC the government there has said small producers are great, they employ local people, they buy local farmers’ grains and produce and they create local tourist destinations. For these reasons, the first 50,000 litres are free of spirits tax. Wow!
After lobbying the Ontario government for 15 years, small distillers have managed to get a small rebate that amounts to less than 20% of the spirits tax.
Although our sales are great, we have been losing money for four years and in truth I’m not sure how much longer we can do this. Should the government be the tool of large corporations to crush all competition? Please allow us to thrive and eliminate the spirits tax on the first 50,000 litres.
Marty Van Vliet,
CEO, Elora Distilling Company