I have been intrigued by the amount of attention paid to the controversy over the varying rates of tax on B.C. breweries.
I confess to self-interest here — I happen to be a big fan of microbreweries and the products they make, including Langley’s own Dead Frog Brewery, which I toured last summer.
This story gained a lot of traction for two reasons. One is that a group of Liberal MLAs were upset with a regulation published by the government office responsible for the tax, which is under the supervision of Energy Minister Rich Coleman, who happens to also be the Fort Langley-Aldergrove MLA. Such internal resistance, even behind closed doors, makes news.
The other reason was that Pacific Western Brewery, the Prince George brewery which prompted a new look at the tax policy because of a potentially huge tax bill it was facing, is a supporter of both the Liberals and Coleman. Owner Kazuko Komatsu donated two one-week stays in the Bahamas to a recent Coleman fundraiser. They were valued at over $27,000. The Liberals are repaying the amount donated.
The new regulation, issued last Monday, will see the tax rate rise incrementally for breweries that produce between 160,000 and 300,000 hectolitres annually. However, there will be no big back tax bill once a brewery reaches a certain threshold. This was going to cost Pacific Western close to $10 million, and the company was thinking of stopping production until year-end to avoid the huge tax bill.
The lower tax rate was initially brought in by the Social Credit government in 1988. It was meant to encourage small breweries, and it has been a great success. B.C. has a thriving microbrewery industry, and the wide variety of products on the market is a far cry from the days when almost all the beer sold here came from three large plants — and almost all of it tasted the same.
This has in turn helped to build up other businesses, notably restaurants. I visited a thriving Langley pub, Town Hall Pub, last week and its business is dong well. One reason is the wide variety of craft beers it sells.
There are also restaurants and pubs who brew their own beer. One of my favourites is Spinnakers in Victoria, which has been making its own beer for 28 years. In addition to making top-quality beer, it has a great restaurant in a stunning waterfront location. It is dedicated to using local farm produce — another trend that is on the upswing.
This emphasis on local products and unique flavours is a worldwide trend and the B.C. microbrewery industry is a critical component of its success here. The same can be said for the thriving wine industry.
It appears that the new regulation will favourably help seven smaller breweries to transition into larger businesses, employing more people, paying more taxes and brewing more unique products.
That seems to me to be a win-win situation for the provincial government and the breweries, and it certainly benefits consumers.