Over the past six years the number of distilleries in the US has increased over six-fold to employ over 18,000 people. Alberta, British Columbia, and Nova Scotia have all seen rapid job growth from supporting their craft distillers. The Ontario Chamber of Commerce recently recommended lowering small distillery taxes to bring the boom to Ontario.
Although consumer demand for craft spirits is rising, Ontario’s 34 craft distilleries face a punitive tax and regulatory environment. In 2017, a new provincial Spirits Basic Tax was introduced at a rate of 61.5% that is only charged at distillery tasting rooms. The comparable tax at winery tasting rooms is 6%. When the tax was introduced, a small distillers rebate program was launched. Now the rebate program is ending, but the tax remains.
Craft distillers in Ontario need to rely on sales through their tasting rooms and directly to restaurants since the effective tax rate on sales through the LCBO is over 260%. Unlike Ontario beer and wine, craft distillers must compete with international marketing budgets for LCBO shelf space.
WHAT YOUR CRAFT DISTILLERS NEED
1. Lower the tax at distillery tasting rooms and direct to restaurants to be the same as microbreweries.
2. Lower the LCBO markup on spirits made primarily with Ontario ingredients from small Ontario facilities to be equivalent to microbreweries, graduated by production method and volume
PREMIUM CONSUMER ACCESS
3. Reserve shelf space at the LCBO in each spirit category for Ontario spirits, like Ontario wine and beer.
4. Allow Ontario distillers to open a satellite tasting room, like American craft distillers, since distilleries are usually required to be in rural or industrial areas.