New tax policy for breweries draws unlikely NDP support

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The trade association representing Canada's big breweries is slamming the B.C. government's newly announced tax policy as a move that will cost millions without boosting tax revenues.

But Monday's announcement from Energy and Mines Minister Rich Coleman, who is responsible for liquor policy in the province, was greeted with support from an unusual quarter – the opposition New Democrats in B.C., who had previously been wary of the move.

Word of the potential policy came last week in the context of an alleged favour being done by the BC Liberals for Pacific Western Brewing Co. of Prince George, which was threatening to close its doors unless it got tax relief. Pacific Western is owned by Liberal supporter Kazuko Komatsu, who donated two one-week stays at a resort in the Bahamas, valued at $26,600, as auction items for a fund-raiser held in Mr. Coleman's riding of Fort Langley-Aldergrove on Nov. 8.

Mr. Coleman has said the items did not fetch much cash.

Mr. Coleman went to Prince George to announce, in essence, that the upper limit for favourable mark-up rates will increase from a threshold of 160,000 hectolitres production – a level Pacific Western was poised to hit – to 300,000 hectolitres, a move the government claims will benefit seven B.C.-based breweries.

The minister, who is placing the new policy in the context of progressive changes to liquor laws in B.C. that include liquor in theatres and corkage rules that allow bringing your own wine to restaurants, has described it as a move to help small breweries.

Maurine Karagianis, liquor distribution critic for the opposition NDP, said the politics of the issue have been messy, but the outcome is sound. "This is very good news for the industry," she said, noting the policy would ease anxiety for about 50 Pacific Western workers who could have been affected. "I am agreeing with the government. For some time, the industry has been waiting for a clear message on moving forward."

Ms. Karagianis said Mr. Coleman should always be cautious about conflict of interest or apparent conflict of interest, but "at the end of the day, the policy looks reasonable and does allow the industry to grow. If we set aside the issues of conflict, the policy itself is sound."

However, Jeff Newton, president of Canada's National Brewers – a trade association representing Molson, Labatts and Sleeman breweries – said they were "disappointed" with the announcement because it would institute the highest government subsidies in Canada for breweries. Mr. Newton said it would artificially subsidize prices without allowing the market to actually grow. He said the cost of the program will rise without a return of tax revenues.

The larger breweries have been concerned about the prospect of the shift, fearing it would allow smaller breweries like Pacific Western to gain market share from larger breweries, which are taxed at a higher rate.