Canada. B.C. government says tax break will help small craft breweries expand

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British Columbia’s small breweries no longer face a major tax bill for increasing their sales, says Rich Coleman, the minister responsible for liquor control and licensing.
Coleman said Monday the Liberal government approved a tax break that allows smaller breweries to expand without immediately paying the same taxes major beer producers face, but it’s a move that has caused him a bit of a political hangover.
After all, Coleman said he returned Friday two tickets to the Bahamas, which were offered to a Liberal Party fundraiser by one of the smaller breweries, Pacific Western Brewing Company, that stood to benefit from the tax change.
“We should not have taken those,” Coleman said. “No money was accepted.”
Coleman said under the old liquor markup policy, a higher tax rate kicked in when a brewery produced 160,000 hectolitres of beer — each hectolitre being 100 litres of beer.
With the new policy, smaller breweries will pay increased taxes on an incremental scale that rises every 5,000 hectolitres sold above 160,000 hectolitres, he said.
The change will help seven B.C. craft breweries to expand and create local jobs, Coleman said.
“Now, a small brewery can look at this and know when they are going to hit certain thresholds of tax and they can make their business decisions on whether it’s time to add a faster bottling line or increase their production,” Coleman said.
The development of the beer policy resulted in a political wrangle for Coleman, starting on Nov. 14 with the Liquor Distribution Branch, the arm of government that sets liquor policy.
Letters were sent to beer suppliers, informing them of a new markup policy that included a tax rate covering sales from 160,000 hectolitres to 400,000 hectolitres.
But officials in Coleman’s office issued a statement last week calling the Nov. 14 letter an inadequate version of the tax policy and said a new one was on the way.
The new policy announced Monday covers beer-tax changes from 160,000 hectolitres to 300,000 hectolitres.
While the new policy was being developed, Coleman’s motives came under fire, with some suggesting he was favouring smaller brewers that have donated to the party’s coffers and offered gifts at a Coleman party fundraiser.
Coleman said he was then hit by large and small breweries while changing the tax policy, and at one point Prince George’s Pacific Western Brewing Company threatened to shut down its operation rather than pay increased taxes.
“That’s life, ” said Coleman. “I’m a politician, somebody’s going to take a shot at me one way or another. I was resisting the smaller brewers and I was resisting the national brewers, so both of them, obviously tried a bit of politics on me. I tried to strike a balance, and I think I did.”
Coleman also faced suggestions of political favouritism when it surfaced Pacific Western Brewing’s president Kazuko Komatsu donated tickets to the Bahamas worth almost $27,000 for a Liberal fundraising auction in his Langley riding.
But both the large and small beer brewers contribute donations to the B.C. Liberal Party, Elections BC records show.
Records of financial contributions filed with Elections BC show so far this year, Pacific Western Brewing Company made donations amounting to $15,550 _ including a $1,200 personal contribution from Kazuko Komatsu. In 2011, the total was $24,850.
Those contributions dwarf the tallies posted by the larger beer makers: Labatt’s donated $750 in each of the last two years, while Molson Coors donated $11,800 in 2011, but only $300 this year.
Sleeman Breweries donated $800 this year, as compared to $346 in 2011, a contribution given for Premier Christy Clark’s byelection campaign.
The Beer Store, which is owned by Molson, Labatt and Sleeman, contributed $19,800, including money to the leadership campaigns of Kevin Falcon, George Abbott and Clark. This year, however, the donations were zero.
None of the brewers listed above donated to the NDP.