Winemakers, NDP call for removal of Ontario retail winery tax

Jakub Lipinski recounts a long-running joke in Ontario's Niagara Region: if you want to make a small fortune in wine, you start with a big fortune.

Lipinski, whose family runs Big Head Wines, was recently at the Ontario legislature to show support for a private member's bill local New Democrat representative Wayne Gates plans to introduce in the fall to eliminate a tax on wineries.

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Ontario winemakers have long raised concerns about the province's tax regime. Lipinski says 65 per cent of the price of a bottle is taxes and especially after the challenges that COVID-19 brought, it would help the industry to have one of them cut.

"Especially after the last few very difficult years, it would be nice to have a little bit more relief from the government," he said at a press conference with Gates.

Gates' bill, which he also introduced in 2020 but which did not go anywhere before the legislature prorogued a year later, would eliminate a 6.1-per-cent basic tax on all on-site retail sales of 100 per cent Ontario wines.

Bill Redelmeier of Southbrook Vineyards said the vast majority of small wineries are not making money or are losing money.

"Most winery owners are in it for the passion, not for the profits," he said at the press conference. "This 6.1 per cent is an additional insult on top of all of the other things that are happening. To remove this tax would be fair, would be easy."

The tax doesn't apply to foreign-imported wines and punishes domestic producers, Gates said.

"In my opinion, this tax only serves to harm our Ontario wines and creates an unfair advantage to foreign winemakers," he said.

"The change is long overdue. Frankly, policies like this keep our local wineries and industry down. For far too long, our domestic wineries have been overlooked and outright ignored."

A recent Deloitte report commissioned by Ontario Craft Wineries, Tourism Partnership of Niagara and Wine Growers Ontario said the province's wineries are taxed at a rate "not seen in any other wine-producing nation."

The 6.1-per-cent tax represents a rate not seen anywhere else and is a "particular pain point for small wineries."

"(It is) essentially a tax on small businesses, and it represents a major barrier for those trying to excel in the wine industry," the report said.

"Reforming this tax would not only help the industry, but it would also bring about considerable economic growth and provide more employment opportunities."

The Ontario Chamber of Commerce has also called for the removal of the tax.

The province did not respond to request for comment.

This report by The Canadian Press was first published Sept. 16, 2023.