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Bill to Amend Shipping Law On Its Way

Great news for those following the wine shipping law saga. Dan Albas, the MP for Okanagan-Coquihalla, will introduce a private members\’ bill which is intended to amend the Importation of Intoxicating Liquors Act (IILA) next week. The IILA is the 1928 post-prohibition federal law that prevents wineries from shipping directly to their customers in other provinces. The private members\’ bill is entitled \”An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use)\”. More details on the exact wording and effect of the Bill (if it gets passed) will be posted as soon as they are available.

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News from AUS: Strange Wine Health Claims & The End of Wine Tax Rebates?

Two items of wine business news from Australia this week have possible implications in BC:

The End of Wine Tax Rebates? Two of Australia\’s major wine producing companies have called for sweeping reform of Australia\’s current wine tax system which is similar to BC\’s system. The Australian approach includes a 29% \”wine equalization tax\” on all wine consumed in Australia. However, Australian producers have been eligible for a \”rebate\” of the tax in most situations. The unequal treatment of imported and domestic wine prompted trade complaints from both New Zealand (which complaint was settled by making its producers eligible for the rebate) and from the EU. Now, Treasury Wine Estates (Penfolds, Wolf Blass, etc) and Pernod Ricard (Jacob\’s Creek) have both called for an immediate overhaul of the system. Treasury\’s CEO stated:

Tax has a fundamental influence on both the structure and sustainability of the Australian wine industry. In the context of our industry’s current challenges, ambitious reforms are urgently required if we are to achieve our vision of an Australian wine industry that is economically, socially and environmentally sustainable. In particular, the WET rebate must be abolished or fundamentally reformed. It is untenable to have a tax mechanism that inhibits restructuring and works against the long term best interests of our industry, whilst also costing Australian taxpayers more than $200 million a year. Significant wine tax reform won’t be easy to implement and we understand the considerable impact it will have on some sections of the industry, and therefore advocate the need for appropriate support and transition arrangements. It will, however, be critical if we are to fundamentally address our industry’s challenges and protect the sustainability of Australia’s wine sector over the long term.

See here for more commentary and analysis on this story: Treasury Calls for WET Tax Abolition or Shake-up and WET Rebate Doomed to Dry Right Out. As noted above, BC\’s current wine tax system is similar to Australia\’s in that we impose hefty liquor board markups (123%) at the wholesale level and then in most circumstances, provide exemptions or rebates back to local producers. Most wine producing countries provide some form of subsidy to their producers. However, these subsidies are normally provided in the form of agricultural or technical assistance. Few countries provide wholesale or retail price subsidies which have both the immediate effect of driving prices up for consumers and the long term effect of distorting the economics of the industry (as was noted in Andy Hira\’s recent report on the BC wine industry).

Wine Health Claims. A recent report by the \”Alcohol Policy Coalition\” in Australia generated media coverage because it claimed that the health benefits of drinking red wine are a \”myth\”. Judging from academic reaction to the claims in the report, it now appears that this report was based on temperance-type ideology and flawed science. Wine Spectator reports that there is little scientific foundation for the claims in the report and, even more significantly, the Boston University School of Medicine calls the report \”biased and unscientific\”, states that it is \”shocking\” that government agencies would align themselves with it and notes that \”the paper disregards the vast majority of well controlled studies which show significant and concrete public health benefits of moderate alcohol consumption\”: see \”A misguided statement on alcohol and health from a coalition in Australia\”.

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Rule of Law Missed by Liquor Boards on Shipping Issue

The FreeMyGrapes campaign, which is pressing for reform of Canada\’s archaic interprovincial wine shipping restrictions, recently requested that the various provincial liquor boards clarify their interpretations of whether it is legal for individuals to have wine shipped to them from wineries in other provinces (i.e. direct to consumer wine shipments). You can read the responses here. I have now updated my recent Shipping Law Update August 2011 to include an analysis of those responses. From a legal perspective, the responses are problematic because some of them appear to ignore the plain meaning of the liquor laws that the boards are supposed to operate under. Please read the Update for the full details but here is a summary:

Alberta. Alberta law states that the \”importation\” of wine for personal consumption is legal but the AGLC says that you can only import wine if it \”accompanies the individual\”. The law makes no such distinction and the plain meaning of \”importation\” includes direct to consumer shipments.

Ontario. Ontario law does not deal with the importation of wine from other provinces but the LCBO has created a new \”policy\” permitting importation of specified amounts \”on their person\”. Since the LCBO has no powers outside Ontario or over interprovincial trade, it is difficult to see how the LCBO can use its \”internal policy\” to modify a federal law that prohibits the behaviour in question.

PEI. PEI law permits individuals to \”import\” and keep up to 2 litres of wine from other provinces but the PEILCC says you can only do that if you bring the wine \”on your person\”. Once again, the law makes no such distinction and the plain meaning of \”import\” includes direct to consumer shipments.

While change is welcome, even in small steps, the troubling aspect of the above is that the liquor boards appear to be interpreting their own laws in a manner which is inconsistent with the plain meaning of the law. In my view, the liquor boards are obliged to apply and interpret the laws as they are written. If they don\’t like the laws, they can ask their respective governments to change them. You and I are not free to interpret liquor laws (or any laws) in ways which we would prefer but which are contrary to their plain meaning. Liquor boards are also required to follow the rule of law.