EU-Canada Trade Pact Will Include Wine
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- Written by Mark Hicken Mark Hicken
- Category: Latest News Latest News
- Published: 16 June 2009 16 June 2009
I attended the Conference on the European Union - Canada Relationship yesterday in Vancouver which was very well attended by those seeking to determine the scope and impact of a possible EU-Canada Trade Pact for which negotations have just commenced. The EU trade officials made it clear that wine and beer has been a trade irritant in the past and would certainly be included in any trade deal. Indeed, the EU's chief negotiator, Mauro Petriccione, made it clear that "when we say the agreement will be comprehensive, we mean it". The negotiations are hoping to conclude a deal within 2 years.
The impact of the negotiations and any prospective trade deal on British Columbia's wine industry could be significant for VQA producers as there are currently preferential treatments given to BC VQA wine in respect of both pricing (application of liquor board markup) and distribution within the province. I'll write a more in-depth analysis on this subject in due course but there could be problems and issues with both the VQA rebate system and preferential distribution channels. Although the dollar amounts related to these programs are small in the grand scheme of things, they are likely significant to VQA producers.
Wine & Liquor Tax Issues Heating Up Across America
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- Written by Mark Hicken Mark Hicken
- Category: Latest News Latest News
- Published: 11 June 2009 11 June 2009
Governments are facing challenging fiscal situations world-wide. As a result of mounting economic pressures, governments across North America appear to be looking to liquor and wine taxation as a source of increased revenue. In April, Alberta raised its provincial markups (hidden taxes) on all forms of liquor. The U.S. federal government is exploring the idea of taxes on wine, liquor and sugary soft drinks. California has debated this issue prior to almost every state budget recently. And the latest salvo comes from New Jersey where that state is proposing to increase liquor taxes by about 25%.
Which of course brings us to BC and the newly re-elected Liberal government. Unfortunately for the Liberals, there is basically no room for increasing revenue within the current system. BC already has the highest wine taxes and prices in North America and the highest in the world in any significant wine producing region. Liquor sales in BC were down significantly by both volume and price in the last quarter. That trend is excessive compared to other neighbouring jurisdictions and could be a harbinger of growing problems of evasion for an uncompetitive system.
In my view, the government should be taking a serious look at overhauling the current system so that we can have a liquor distribution and revenue structure worthy of the 21st century. Here's some food for thought: the Alberta and BC governments generated almost exactly the same amount of per capita revenue from liquor even though the Alberta system is privatized and has lower prices. And that was BEFORE the recent increase in Alberta markups. Maybe BC should consider systemic reform if it wants to maintain or increase its liquor revenue.
US Feds Propose Increased Taxes on Wine
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- Written by Mark Hicken Mark Hicken
- Category: Latest News Latest News
- Published: 29 May 2009 29 May 2009
WA State Reforms Wine Laws
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- Written by Mark Hicken Mark Hicken
- Category: Latest News Latest News
- Published: 06 May 2009 06 May 2009
One of British Columbia's neighbours, Washington State, is reforming many aspects of its winery and wine distribution laws in Bill 2040 which resulted from hearings of a Joint Select Committee from both the state senate and house. The Bill has now been signed into law by the Governor. The bill is multi-faceted: it removes "tied house" restrictions so that the owners of a retail establishment serving liquor such as a hotel or restaurant could also invest in a winery (previously prohibited). It also reforms many, but not all, aspects of state distribution laws which were the subject of a long running legal battle between Costco and the state. These include elimination of both the required 10% markup by distributors and the "post and hold" requirement which restricted changes to the prices of beer and wine. Costco, however, has indicated that it will seek further changes "to bring the beer and wine regulations into the 21st century".
Maybe it's time for similar reform here in B.C.? After all, our laws are even more archaic than Washington state's. If you agree, please contact your MLA and express your support for wine law reform.
Washington state originally had a state control liquor system similar to BC. Washington stands as an interesting contrast to BC because at one point, Washington's state control system was similar to BC's current one in that all imported product was marked up substantially and had to be sold through government stores. Washington wineries, however, escaped the markups and could sell through other channels. Consumers were supposed to only purchase through the government system and were required to pay markup on any imported wine brought back into the state (much like BC's current laws). Of course, in the U.S., it was not that difficult to circumvent the system by ordering or purchasing wine in another state at a lower cost and then bringing it back to Washington.
Eventually, after some prosecutorial blunders by the liquor board, public pressure forced the Washington state government to reform the system. Reform has resulted in nearly all wine and beer now being sold through private retailers. A network of state liquor stores has been maintained with a continued monopoly over the sale of spirits and a small portion of annual wine sales. Taxes are, of course, much lower in Washington than in BC so prices are also lower.
Globe Followup on Shipping Laws
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- Written by Mark Hicken Mark Hicken
- Category: Latest News Latest News
- Published: 06 May 2009 06 May 2009
Following up on an item in my most recent newsletter, there is an excellent article on the current state of Canadian wine shipping laws in today's Globe and Mail. Beppi Crosariol provides an update on efforts to reform our archaic prohibition era laws. At the present time, the Canadian Vintners Association is attempting to convince CALJ (the Canadian Association of Liquor Jurisdictions - i.e. the provincial liquor boards) that reform is in everyone's best interest. In my view, reform is imperative at this time. The current Canadian laws are susceptible to challenge on numerous legal grounds and it is in both the industry's best interest and consumers' best interests for the system to be reformed.