A new provincial government tax incentive for B.C. brewers will do nothing to help true craft producers such as Chilliwack's Old Yale Brewing.
The minister in charge of the Liquor Distribution Branch, Rich Coleman, announced a mark-up policy that will "help small breweries to grow," according to a press release issued Monday.
But the government's definition of "small" needs work, according to some.
The changes announced Monday really only benefit one brewery in the short-term, Pacific Western out of Prince George, which was about to be faced with a tax hit of nearly $9.5 million.
Because of that potential tax hit, Pacific Western announced it might shut down production for the year and lay off workers.
On Monday, Coleman was in Prince George with area MLAs to announce the new policy that would see the tax cliff levelled for those producing beer between 160,000 and 300,000 hectalitres (hL) per year. (One hL is approximately the size of a keg.)
But out of the close to 50 breweries in B.C., the government estimates the new rules will
benefit seven: Pacific Western, Northam Brewery, Mark Anthony, Philips Brewing, Vancouver Island Brewing, Fireweed Brewing and Russell Brewing.
A ministry spokesperson said the seven breweries produce between 15,000 hL and 160,000 hL. But even the low end of that- which is just one-10th of the level where there is a tax benefit-is a big brewery according to Jeremy Sibley, co-owner of Old Yale.
"When you look at how many brewers there are in B.C. and how many are under that threshold, collectively those brewers employ a
lot of people and if you are going to make changes that you say are going to improve the competitiveness of small breweries, make it apply to small breweries," he said.
Old Yale will produce less than 1,200 hL this year, putting it at less than one per cent of the level of production talked about by the ministry.
The BC Craft Brewers Guild was also not impressed.
"The government has not consulted with the BC Craft Brewers Guild on the changes made by the Minister," said guild chairman Tod Mel-nyk in a press release. "And while we appreciate the fact that the BC Liberal government wants to help small businesses, especially the brewing industry, this is not something that benefits anyone other than one brewer, and there are many other initiatives that we would look for their support on that affect all of the small brewers in the province."
The move was particularly controversial because Coleman's riding association had accepted in-kind donations worth about $27,000 from Pacific Western for a fundraising auction.
Coleman agreed Monday it was improper to accept the donation from a company that was to benefit directly from tax he was overseeing. He added that he has cancelled the auction items and returned the money.
As for the policy, the
big brewers don't like it much either.
Jeff Newton, president of Canada's National Brewers, said his organization had proposed a plan that would see the transition start at 50,000 hl and end at 150,000 hl.
Coleman said that was a non-starter, adding he had also rejected a request by Pacific West-
? to raise the threshold to 200,000 hl.
"It's a balance," he said. "In liquor, when everybody is a little bit unhappy you get close to what you're trying to accomplish because nobody is ever happy in this file."
Sibley said the provincial government needs to find a different model and he advises they check out what is being done in Washington and Oregon where craft breweries are thriving.
"They've got hundreds of small breweries down there making some of the best beer in the world," Sibley said. "B.C. needs to look to them to see what works."