Tax change helps smaller B.C. breweries

Sales of Pacific Western Brewing
Sales of Pacific Western Brewing's low-priced Cariboo beer line helped push the company's production up to a tax threshold that could have triggered millions in retroactive taxes and forced a pre-Christmas shutdown of the Prince George company.
— image credit: Black Press

VICTORIA – The B.C. government has changed its policy for taxing smaller breweries, to stave off a possible pre-Christmas shutdown at a Prince George brewery and promote growth in the craft brewing business.

Smaller breweries are taxed at a lower rate than big commercial operations, until this week paying a flat tax of $1.75 per litre of bottled or canned beer and $1.20 per litre of draft. That rate applied until annual production reached 16 million litres, at which point the higher commercial brewery rate applied to the entire production run.

Reaching that threshold would trigger a tax increase in the millions of dollars, and Pacific Western Brewing of Prince George was the only B.C. producer getting close, partly from increased sales of their low-priced line of Cariboo beers. The company notified its employees last week that it was facing a shutdown for December if the tax policy didn't change.

Deputy premier Rich Coleman said Monday the new system creates a sliding scale of tax rates for smaller brewers that takes them up to the commercial tax rate of big breweries when they reach 30 million litres of annual production. Retroactive taxation no longer applies to amounts up to the limit for qualifying breweries.

Coleman said he supports the general policy of giving tax relief to smaller brewers, brought in by the Social Credit government in 1988. But the production ceiling and retroactive tax have created problems for brewers since then, and he hopes the new policy will allow them to plan their business and grow.

An earlier version of the policy was withdrawn last week, amid reports that the president of Pacific Western Brewing had recently donated an auction prize of accommodation in the Caribbean to a party fundraiser in Coleman's Fort Langley-Aldergrove constituency.

Coleman said he has returned that donation, and he should have checked to see that party donations were not solicited from people who have current business with his ministry. Both smaller brewers and large multinationals donate to the B.C. Liberals.

He said the policy includes a chart that shows what brewers pay at each production level, to reduce confusion about how it applies to each business. The preferential rates apply to seven breweries currently operating in B.C.

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