‘Gut punch:’ Alberta wine agents frustrated with new wine tax on top of American liquor import ban

As trade tensions continue, the liquor ban here on new U.S. product remains, and there is a new tax just on wine. Some in the industry say they need a break.

Amid ongoing tensions with between Canada and the United Stations, the province’s ban on importing new American liquor product, some wine import agencies say a new tax targeting wines sold in Alberta is the last thing they need.

“A gut punch, if you’re a small business owner just looking to carve out your space and take advantage of this Alberta advantage, so to speak,” said Reed White, president of Cellar Maker Imports based in Calgary.

Wine import agencies are a unique business in Alberta as wine sales are privatized.

White estimates a quarter of his business is representing wines from States like California, Oregon and Washington.

“(It is) directly affecting the livelihood of a lot of agencies.”

He adds he feels hardest hit by Alberta’s new tax on wine a specific price point.

Ad Valorem

On April 1, the province introduced an “ad valorem mark-up” which is an extra percentage-based tax.

It’s applied to the “invoice price,” set by the agent before the retail price.

The new tax adds five per cent on wines from $15 - $20 per litre -- 10 per cent on wines from $20 - 25 and 15 per cent on wines $25 and up.

The Alberta Minister’s Office for Red Tape Reduction says the price at the store for a 750 millilitre bottle originally sold for $25 goes up by 20-40 cents.

That same size bottle previously sold for $50 would increase by about three dollars.

“The optics were very much. Okay, here comes another tax, right? When we don’t need one, when there’s already issues with tariffs, cross-border shopping, our relationship with America,” said Steve Goldsworthy, general manager for Britannia wine merchants

Singled Out

Another wine agent says it seems as though premium wine is being singled out, as many higher cost bottles are priced to reflect sustainable production on family run operations.

“We’re competing against some of these major players who have literal wine billboards up on the side of the road versus us. We’re doing everything by hand, person-to-person,” said Erik Mercier, president of Juice Imports.

Mercier adds that the majority of cheaper wines are made on a large scale by American-based producers, and are exempt from the impact of the new wine tax.

“I think that that is incredibly unfair and unjustified.”

Little recourse

Some Calgary wine retailers say the new tax was implemented without proper consultation with the affected wine industry.

“I’ve been in the business for 20 years, and I think this is the most challenging time we’ve ever seen in the wine spirits business,” said Jesse Willis, co-owner of Vine Arts.

He adds that the new tax affects price quotes provided to restaurant partners, compounding existing challenges.

“The government was able to just slip this tax in and give us little recourse on our end,” said Willis.

Province explains new tax

In a statement from Brandon Aboultaif, press secretary the Minister of Service Alberta and Red Tape Reduction, it reads:

“Last year, for the first time in more than 20 years, we conducted a comprehensive review of the liquor markup system. We acted primarily on feedback from industry stakeholders – large and small – who shared concerns about fairness, growth opportunities, and unintended consequences of the existing system.

“Alberta’s liquor markup system needs to support the long-term viability of the province’s liquor industry and serve the interests of Albertans. Liquor markup revenue supports essential government programs and services.”

Aboultaif added that an estimaed 16 per cent of wines sold in Alberta would be affected.

“There are no plans at this time to remove the ad valorem mark-up,” said Aboultaif.

Metrovino, another Calgary wine shop has sent an e-mail blast to more than 5,000 subscribers asking them to petition the province to repeal the new tax.