Evidence of meeting #50 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was wine.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

3:35 p.m.

Conservative

The Chair (Mr. James Rajotte (Edmonton—Leduc, CPC)) Dan Albas

I call this meeting to order.

This is the 50th meeting of the Standing Committee on Finance. Our orders of the day, pursuant to the order of reference of Wednesday, December 7, 2011, concern a study of Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use).

We have two panels today, colleagues. In our first panel we're very pleased to have our colleague, the member of Parliament for Okanagan—Coquihalla, Mr. Dan Albas. Welcome to the committee and congratulations on your bill passing second reading. I understand you have an opening statement for the committee, and then we'll have questions from members.

Please begin your opening statement.

3:35 p.m.

Conservative

Dan Albas Okanagan—Coquihalla, BC

Thank you, Mr. Chair.

Some 83 years ago, during the Prohibition era, the Importation of Intoxicating Liquors Act, known as the IILA, was passed, making it illegal for everyday citizens to transport or ship wine across provincial boundaries. It is for all intents and purposes an interprovincial trade barrier, meaning a winery in Quebec cannot legally sell a bottle of wine to a customer in Alberta.

Now, here's where it gets more redundant. That same Quebec winery that cannot legally send a bottle of wine to Alberta can send that same bottle of wine to a customer in Texas. Many small Canadian wineries can more easily access markets outside of Canada than they can within our own great country.

Canadians have proven that they can produce some of the best wines in the world, yet they cannot sell that wine directly to consumers in other Canadian provinces. We as members of Parliament have the opportunity to work together and change this by supporting Bill C-311.

Let's imagine if cars built in Ontario could not be sold in British Columbia. What if prize Nova Scotia lobster could not be sent directly to households across Canada? This is the reality for our small Canadian wine producers.

The wine industry has been battling this unjust Prohibition-era legislation for many years. Now it's time to open up the Canadian marketplace to support the hard-working families who run small wineries in provinces like Quebec, Nova Scotia, Ontario, and British Columbia.

How do we best eliminate the 80-year-old trade barrier, put an end to wine prohibition in Canada, and open up the Canadian marketplace? I would like to share the intent and direction of my proposed amendment to the IILA legislation. I would also like to add that I worked very closely with Minister Shea, parliamentary secretary Cathy McLeod, and their staff for the duration of this process. I would like to publicly thank them for their efforts and support in helping move this bill forward.

Essentially, Bill C-311 proposes an amendment that would allow private citizens to directly transport, or cause to be transported, wine that is purchased from one province to another province, provided it is for personal use and the personal exemption policy of the latter province allows it.

Let's be clear on a few points. Yes, this amendment supports Canadians being able to directly purchase wine online from a winery in British Columbia, Nova Scotia, Ontario, or Quebec and have that wine shipped back to a province such as Alberta. This action would no longer be in contravention of the IILA legislation.

Let's also be clear that this amendment will ultimately clarify that it is indeed the provinces that can set up their own personal importation policy as they see fit. In essence, my amendment proposes to take Ottawa and this trade barrier out of the way and let the provinces set policy that they feel is appropriate.

There are some interests that would like to propose an amendment to the language of my bill, an amendment that in my view would potentially be more restrictive on the ability of the provinces to set importation policy. An example is inserting the word “reasonable”. Now, who would decide “reasonable”, and what mechanism is there to address that definition?

For the record, I do not support efforts to amend the language of Bill C-311 in any way that might restrict the ability of the provinces to set their own personal importation policy. As much as we all support interprovincial trade, we must also recognize that liquor distribution is a provincial responsibility, and provinces and territories must be free to set their policies accordingly.

Again, I point out that ultimately my goal here is to remove the federal government and the IILA as a trade barrier. I shall also note that some provinces have already taken a leadership role in setting their own personal importation policy. In fact, I would suspect that you will hear from the Canadian Association of Liquor Jurisdictions, which will mention this as one of the reasons they are not likely to support the amendment.

However, provincial policy should not conflict with federal legislation. The fact that a federal law exists to prevent this practice does raise the obvious question of a potential conflict with provincial policy. In other words, how can a province essentially say it's okay to personally import wine while the IILA legislation is clear that this is a criminal act? That, of course, leads to another reason that this amendment in Bill C-311 is badly needed.

I would also add that not all provinces have a personal importation policy. In fact, one province has stated that it will not consider such a policy until the IILA legislation is amended, which is precisely what we are trying to do here.

The final discussion I expect you to hear is one of revenue. Will the amendment create a loss of revenue for liquor distribution monopolies?

I have a few thoughts on the subject. In my riding, many of the smaller wineries do not sell through provincial liquor distribution models. They simply do not have the volume and cannot afford the hefty fees. One small winery owner tells me that it costs him roughly 60% to sell through the liquor distribution branch, and he simply does not have the volume to absorb those kinds of costs. To maximize his income, he depends on the ability to sell directly. Unfortunately, for many of the vacationing Albertans who visit his winery every year, even though Alberta does have a consumer-friendly personal importation policy, IILA still makes it illegal for wine to be taken home by his customers, and shipping remains illegal.

I'd like to take a moment and illustrate another reason that Bill C-311 is not only good for the wine industry but also for the shipping industry. Today, major shipping companies will not ship wine precisely because of the IILA. I have had a few major shipping companies that wanted to be here in person to show their support for Bill C-311 and illustrate how this will be a positive economic policy for the Canadian shipping industry.

I'll get back to my small winery example. In this case, many small wineries currently do not sell through the provincial liquor distribution system. It is difficult to suggest or assess that there would be a loss of revenue, as many of these wineries are already engaged in direct sales. Bill C-311 simply looks to rightfully expand that marketplace across Canada.

We must also recognize that when wine is sold, it is fully subject to HST or PST and GST, depending on the jurisdiction. In other words, increased wine sales resulting from Bill C-311 would continue to benefit government revenues, just not solely directly through liquor distribution monopolies. I'd also like to add that there is GST on shipping as well, so any increased shipping activity as a result of this amendment would also increase GST revenues to both levels of government, not to mention all of the economic spinoffs that go along with it.

Who pays for all of this? Well, it is the consumer. That is also an important point to consider in this discussion. Wine as a commodity is fragile and heavy. As a result, this will be very costly to ship. Shipping an individual bottle can range upwards of $20, while shipping a case of wine can be in the $50 to $70 range. Why do I mention that? Ultimately, there is no cost savings to consumers in directly purchasing out-of-province wine. Consumers are not in support of this bill as part of an effort to avoid purchasing from a government-run liquor store; this bill is about consumer choice and opening up the market to small Canadian producers so that they can sell to Canadians.

Over the past six months, I have heard support from all across Canada, and I know that many of you have likely heard from your constituents on this bill as well. This is a small but important step for a Canadian industry that provides jobs and supports our local economies. In my region, the spinoff industries are considerable. I know that both Nova Scotia and Quebec are also emerging wine regions, while Ontario has become Canada's largest producer. We have an opportunity to take a small step that will eliminate a Prohibition-era trade barrier and legitimately help an industry grow and prosper.

I appreciate the time the committee will spend reviewing this bill. I certainly welcome your questions or comments.

Thank you, Mr. Chair, for your consideration today.

3:40 p.m.

Conservative

The Chair James Rajotte

Thank you very much, Mr. Albas, for your presentation.

Colleagues, we should have enough time for one full round. We will begin that round with Mr. Julian. It is a five-minute round of questions.

3:40 p.m.

NDP

Peter Julian Burnaby—New Westminster, BC

Thank you very much, Mr. Chair. I think I will share my time with Mr. Mai, given that the time is brief and we only have one round.

Thank you very much, Mr. Albas, for coming forward today. I just wanted to quickly ask you four questions, and hopefully you can answer some of them or provide us with information later on.

You mentioned provinces and their personal importation policies. Can you give us more specifically which province hasn't developed one yet, but might if this bill is adopted? What provinces have it in place, and what might that policy be?

Second is the issue of whether it should apply just to grape wines or to all wines.

Third is whether you've seen any study on the impact in increased sales in wine-growing regions, whether we're talking about Nova Scotia or British Columbia—the Okanagan and southwestern B.C.—or any study on the impact on provincial liquor distribution branches. Has there been any study into potential loss or gain in revenue?

3:40 p.m.

Conservative

Dan Albas Okanagan—Coquihalla, BC

I appreciate the question.

I believe you asked to see which provinces have an open policy as far as personal importation is concerned.

The two that stick out in my mind, Mr. Chair, speaking through you to Mr. Julian, are Ontario and Alberta. The Province of Alberta has one of the most liberal, I would say, exemptions. It allows an unlimited amount, as long as you transport it on your person. The Province of Ontario also has a limited one.

As I noted in my presentation, other jurisdictions—for example, B.C.—have long held that because of the IILA legislation, there is no point in their looking at a personal exemption. This stems largely from the fact that when the IILA came into force, it basically created separate jurisdictions. While each province has sovereign jurisdiction over its own area, it does not have any authority as far as interprovincial movement of wine goes.

Sir, I'm sorry, but I missed your second question. It was in relation to revenue, was it?

3:40 p.m.

NDP

Peter Julian Burnaby—New Westminster, BC

It was whether there are any studies on loss or gain for provincial liquor distribution branches and personal sales, but I'll pass things over to Mr. Mai. Perhaps he can ask some additional questions, and you can answer them all then.

3:40 p.m.

Conservative

The Chair James Rajotte

You have about two and a half minutes.

March 27th, 2012 / 3:40 p.m.

NDP

Hoang Mai Brossard—La Prairie, QC

Thank you.

Thank you very much, Mr. Albas, for your work.

Regarding wine, I have two questions.

I've heard comments regarding the possibility of having blended wines, which would be a concern for certain regions. Have you looked at that issue?

3:40 p.m.

Conservative

Dan Albas Okanagan—Coquihalla, BC

That's a very good question.

Regardless of the type of wine—what kinds of blends, etc.—this would allow the interprovincial movement of wine. Anything that is subject to the Excise Act, such as foreign bottled wine, would be subject to that act instead. This particular amendment to Bill C-311 has nothing to do with that, but only with the interprovincial movement of wine.

3:45 p.m.

NDP

Hoang Mai Brossard—La Prairie, QC

Okay.

Also, for confirmation, can you say that this includes any type of wine and that it doesn't have to be grape wine?

3:45 p.m.

Conservative

Dan Albas Okanagan—Coquihalla, BC

Again, as I said, it's important to recognize that it's actually the excise tax that imposes a federal duty on wine. Currently, wine that is composed wholly of agricultural or plant products grown in Canada is exempt from the federal excise duty. All other wine is subject to excise duty.

My proposed amendment in no way changes that. My amendment deals only with interprovincial movement of wine for non-commercial uses.

3:45 p.m.

NDP

Hoang Mai Brossard—La Prairie, QC

Okay.

I think my colleague has raised some other issues regarding the impact upon provinces in terms of loss of revenues. What is your view on that, or what is your conclusion?

3:45 p.m.

Conservative

Dan Albas Okanagan—Coquihalla, BC

Thanks for the question.

The bill is specific in that it calls for an exemption under the federal IILA legislation for the personal importation of wine from one province to another, subject to provincial regulations. In other words, the federal government would be ending a Prohibition-era law and leaving it up to the provinces to decide how they would like to work with industry and consumers to respond and to develop workable and sensible regulations that are fair to everyone involved.

3:45 p.m.

Conservative

The Chair James Rajotte

Thank you.

Merci, Monsieur Mai.

We'll go to Mr. Cannan, please.

3:45 p.m.

Conservative

Ron Cannan Kelowna—Lake Country, BC

Thank you, Mr. Chair and members of the committee, for this special opportunity to sit as a guest.

To my colleague Mr. Albas I will say that it has been a pleasure working together. It's been a labour of love for the last several years.

I've had the opportunity to serve the constituents of Kelowna—Lake Country for the past six years and more. It's a pleasure to be here for more than one reason, especially given the distinguished pleasure of being with Mr. Harry McWatters, the guru of VQA wine in Canada, who may live long enough to see that this archaic piece of legislation can be revoked.

As you mentioned, Mr. Albas, the consultation we've had across the country has been fully supported from province to province by the small vintners. Especially for our home base, the Okanagan, maybe you could expand a little bit more on what this will mean for some of the agri-tourism opportunities and for helping the small vintners—by which I mean 2,000- to 3,000-case producers—potentially become clients of the liquor boards and grow to be larger Canadian producers and employ more Canadians.