Liquor review prompts wine taxation discussion 

Debate hears up over whether B.C. should switch to a flat tax on wine

click to enlarge PHOTO FROM SHUTTERSTOCK.COM - Wine in B.C. is taxed and sold in one way, beer another.
  • Photo from shutterstock.com
  • Wine in B.C. is taxed and sold in one way, beer another.

The review of B.C.'s antiquated liquor policies is prompting those in the business to once again question the way wine in taxed and sold in B.C.

The review, which is looking at 73 recommendations to bring the system up to modern standards, doesn't touch on the alcohol taxation structure in B.C., but it's prompted a discussion around it.

There are some in the business calling for a change in how wine is taxed. Eric Griffith of Alta Bistro and Samantha Rahn of Araxi both support a change. Vancouver lawyer Mark Hicken, who specializes in wine law, also supports change. Okanagan wine industry consultant Harry McWatters prefers the current system.

McWatters says switching to a flat tax will hurt B.C. wine makers.

Currently, a flat tax applies to beer while wine is taxed as a percentage of the retail price.

"For a B.C. winery it would have a really negative impact," says McWatters.

Most wine purchasers buy relatively inexpensive wines and according to McWatters, low-cost wines will become more expensive.

According to Hicken, government is engaged behind the scenes in some discussion of possible change.

Hicken agrees with McWatters that the current system favours low-quality wines.

"It should be the other way around, really," Hicken argues.

"I am firmly of the belief that it (a flat tax) would solve a lot of problems because the percentage-based markups tends to retail for double in Canada and sometimes more than double. Then, when it goes into restaurants, or bars or hotels there's no wholesale price for those guys, so they generally mark up 100 per cent from whatever they paid, and since they didn't pay wholesale price they mark up 100 per cent from retail. I think for Whistler it's a particular issue because you get a lot of U.S. tourists and they see wines on wine lists which they could buy in a supermarket for nine or 10 dollars," says Hicken.

That same bottle they can get in the grocery store back home in Seattle, he says, will sell in a Whistler restaurant for about $60. That simply looks like highway robbery to those visitors who know wine pricing.

Rahn came to Whistler from Alberta, where a flat tax is in place. Also, wine buyers in Alberta purchase from a wholesale distributor.

"When I first arrived six and a half years ago it was like travelling back in time and since then nothing has changed," Rahn says.

She calls the tax system in B.C. "insane." Rahn has found ways to function within the insanity, whatsoever.

Griffith is just as frustrated as Rahn.

"Anyone aware of an industry that works on retail margins is aware that making 50 per cent is not really that great of a margin," Griffith says.

He points out that most people who markup prices for retail are pushing their prices up much higher than 50 per cent.

"That flat tax system could work," says Griffith.

"It could be really cool. Cheaper wines obviously become more expensive because there's a flat tax on them, but then the more expensive wines become more reasonable."

He says with a flat tax system a bottle of wine he sells now for $80 will come down to $60.

"The customer is going to get a way better product for the money," says Griffith.

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