B.C. Wines Get New Tax Break

In a statement released by the Solicitor General's office "wineries will receive a greater percentage of the retail price of Vintners Quality Alliance (VQA) wine sold through government liquor stores. This will encourage more wineries to sell their VQA wines in government liquor stores. VQA is a wine standard for 100 per cent B.C. grape wines established and maintained by the B.C. Wine Institute."

The government will also move to increase the discount rate given to licensee retail stores from 12 to 13 per cent. The rate represents the discount private liquor stores receive when they purchase products from the Liquor Distribution Branch, breweries or wineries.

It's hard to believe the provincial government would want to subsidise local wine prices given the obvious jump in quality B.C. wine has experienced since the implementation of the Free Trade Agreement. Competition is what revitalised B.C. wines. Why now after all that has been achieved would we go back down that road?

Prior to 1989 blatant tax advantages left us uncompetitive when measured against the rest of the wine world and the new subsidy could lead us back down the same path. To add insult to injury the new subsidy will only be offered to VQA wines. This should further aggravate those wineries outside the VQA banner who have been working with government and VQA authorities to heal the current industry rift under the newly announced, but never explained how it will work, B.C. Wine Authority.

I can only imagine what foreign wineries will think of the subsidy.

Despite its many successes particularly in the quality department there are many issues facing B.C. wine. One is clearly price. For the most part the wines are over-valued, or to be fair over-taxed, but lowering the tax on all wines including imports (something which does make sense) does not appear to be an option.

When it comes doing business locally a B.C. wineries enjoy several advantages over the foreign competition beginning with direct delivery to licensees (from the winery to the restaurant). VQA members have there own string of retails shops where they can sell wine direct to the public and they are allowed to sell direct from the winery (avoiding the massive mark-up tax applied to foreign wines) too. They also have a permanent display in government liquor stores and the list goes on.

I think we all could live with the many 'home team' advantages accorded B.C wineries but a new subsidy to encourage VQA producers to place their best wines in the single most powerful retail environment in the province smacks of greed not business.

Anyone who thinks this will result in lower B.C wine prices is mistaken. The idea is to give the wineries more money per bottle not to lower the price to consumers.

B.C. wines are already making it in the glass they do not need this kind of aid and if they do maybe the industry is not the force it purports to be.

Time will tell what affect the new measures will have but a subsidy is a subsidy and it will lead to obvious questions about our competitiveness ― questions we thought we answered years ago.