Distilleries disappointed to be left out of tax holiday mix

December 19, 2024 Canuck

Some independent distilleries are asking why they have been left out of the federal government’s GST holiday, with some worried it’s part of a trend of recent financial policies that have let the industry down.

From Dec. 14, 2024, to Feb. 15, 2025, many essential goods will be exempt from the GST or HST, depending on the province.

The list of exempt goods is broad and includes beer, wine, cider and sake, as long as their alcohol volume is 22.9 per cent or less. Spirit-mixed coolers and premixed alcoholic drinks are also on the list, as long as their alcohol volume is seven per cent or less.

“I think a lot of members of the industry were a bit dejected with that announcement because it’s another example of how spirits have been excluded from financial policy,” said Adam Brierley, general manager at SFR Distillery in Ottawa’s Kanata neighbourhood.

He worries that given the cost of living, people may choose to buy what’s cheaper.

“If you’re at the shop and you only have $40 right now with the GST holiday, are you going to buy something that’s viewed as tax-free or are you going to buy something at full price that you know you can always get another time?”

‘Why make it piecemeal?’

Down the road at Top Shelf Distillers in Perth, Ont.,CEO John Criswick isn’t worried customers will change their habits, but he still doesn’t understand why spirits have been left out.

“The HST holiday or GST holiday should just be across the board. Why make it piecemeal and bits and pieces of stuff?” Criswick asked.

“I think there’s the notion and the sort of taboo nature of supporting anything that’s a high alcohol per cent, like vodka or gin and whisky, that there’s this notion that people buy it to just get tanked on — and it’s not the case,” he said.

Industry groups are also trying to combat that reputation on behalf of the distilleries they represent.

“They’re promoting quality products that they want people to sip, savour and enjoy,” said Alex Hamer, founder of Artisan Distilleries Canada.

Hamer said he can’t understand why an industry that includes so many small businesses would be left out a financial policy aimed at helping Canadians cope with the high cost of living.

Premier Doug Ford and Finance Minister Peter Bethlenfalvy are pictured during a news conference in Toronto on Dec. 14, 2023. — Ontario Premier Doug Ford, right, and the province’s finance minister Peter Bethlenfalvy, left, hold a news conference announcing the provincial government’s plan to allow the sale of certain alcohol products in convenience stores on Dec. 14, 2023. (Alex Lupul/CBC)

“It’s got to be either they didn’t think about it, or they have a problem with spirits and they’re almost actively looking to harm or exclude the sector,” he said

The program’s rollout has come under widespread criticism, including complaints from small businesses that say implementing the tax break has been complicated and stressful.

“They can make cocktails in their bar [with] less than seven per cent [alcohol], those still get taxed, but if they stick it in a can — take that GST off,” he said.

CBC reached out the federal Department of Finance to ask why spirits have been left off the list of exempt products, but did not receive a response before deadline.

Double whammy for Ontario distillers

For those making spirits in Ontario, being left out of the HST holiday is just the latest blow.

Between Aug. 1 and Oct. 31, 2024, Ontario gradually expanded the list of retailers where low-alcohol drinks including beer, wine and ready-made cocktails could be sold. The products became available at gas stations and convenience stores, and the privilege was expanded to those grocery stores that didn’t already have a licence to sell alcohol.

But spirits didn’t make the cut.

“If I wanted to invest in a bunch of equipment to make … ready-to-drink cocktails, then I can have a seat at the table and have a discussion with store owners about possibly listing my products,” said Brierley, adding that the endeavour would cost hundreds of thousands of dollars.

Ontario’s Ministry of Finance confirmed in a statement that spirits won’t be included in the retail expansion.

“This is aligned with other Canadian jurisdictions that do not permit high-alcohol spirits on grocery or convenience store shelves to ensure sales are socially responsible,” said ministry spokesperson Scott Blodgett.

But Brierley thinks there’s a way to do both.

“There are a lot of jurisdictions outside of Ontario and outside of Canada where spirits are available at convenience stores or grocery stores. They’re locked behind a case, they’re sold at customer service, they’re purchased through a ticketing system,” he said.

“It’s we’re not trying to reinvent the wheel here: There are many viable options to sell spirits that our governments, federally and provincially, just don’t seem to be interested in considering.”

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