Sask. distillery owner feels federal excise tax discriminates against spirit producers

It may be capped at two per cent, but a Saskatchewan craft distiller wants to see the federal excise tax moving in the other direction.

The tax on the manufacturers of beer, wine and spirits went up by two per cent on Wednesday. The federal government has capped increases to the tax at two per cent, and the cap was extended to 2028 earlier this week. But even with the increases capped, it’s still a higher tax that Last Mountain Distillery in Lumsden will have to absorb.

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“It’s not a tax that generally gets passed on to the consumer in any way, shape or form,” founder Meredith Schmidt said. “It just cuts into our profit margins.”

The reasons for that, she explained, are competition and the provincial social reference price. Schmidt said a retail price hike would not be good for sales.

Also being extended is an agreement that cuts the excise tax in half on the first 15,000 hectolitres of beer brewed in Canada, a move meant to help craft brewers. But Schmidt said she isn’t sure why there’s no similar benefit for small distillers.

“It doesn’t seem fair that the little craft players have to pay the same enormous excise tax that the big guys have to pay,” she said.

“We’re already making less money than the big players in Canada. We would love to see some kind of federal relief for the craft distillery industry, but we’ve been fighting a long time for that and have yet to see anything.”

Schmidt speculated that spirits may face a lingering stigma dating all the way back to prohibition in the United States, but said the craft industry is doing well regardless.

“There’s a lot of great craft producers in Canada, and I think some are making national and international names for themselves,” she said.

“We’re going to persevere. But there’s a lot of great craft spirits out there, and it’s unfortunate that we have to pay the price on this increasing federal excise tax.”

Schmidt said she’d like to see the tax reduced by two per cent each year for the next eight years.

A government source, speaking on condition of anonymity, told the Canadian Press the extension of the cap and the discounted tax are aimed at giving the Canadian beer, wine, and distilled spirits industries some predictability, especially with Canada hosting World Cup soccer games in Vancouver and Toronto this summer

The federal Conservative party and the Canadian Taxpayers Federation have both called on Ottawa to roll back the increase.

–with files from The Canadian Press