Thank you, Mr. Chair.
My name is Dan Paszkowski, and I'm the president of the Canadian Vintners Association. On behalf of CVA members, I am grateful for the invitation to appear here today. I'm pleased to discuss Bill C-311, a proposed amendment to the Importation of Intoxicating Liquors Act .
CVA membership represents roughly 90% of all wine produced in Canada. We strongly support Bill C-311 and are encouraged by the support that direct-to-consumer wine delivery has received from consumers across Canada and from all parties in the House of Commons.
Canada has more than 400 grape-based wineries and 1,000 grape growers producing in six provinces. We have 196 grape wineries in British Columbia, 125 in Ontario, 70 in Quebec, and 22 across the Maritimes. The majority of Canada's wineries are small-volume, premium-focused operations that have significant capital invested in their vineyards, wineries, sellers, retail operations, tasting rooms, and increasingly in cellar door restaurants.
We are a young and growing industry. Each vintage, more wineries are opening and more wines are available for sale. While growth is positive, we are challenged by our limited sales channels and the physical brick-and-mortar limitations of provincial liquor board retail stores. In 2011, VQA 100%-Canadian wine sales represent a mere 6% share of the wine market nationally.
Consumer demand for our wines is thriving, and consumers expect to be able to purchase the wines they want in the manner of their choosing: from retailers, at the winery, and remotely by telephone or online.
In our support for direct-to-consumer wine delivery, we have engaged in discussions with consumers and wineries across Canada; with legal and trade experts; with federal and provincial regulators, liquor boards, and elected officials; and with NGOs focused on alcohol in moderation.
In response, we are recommending two minor amendments to the bill that we believe will enhance its clarity, satisfy consumer demand for choice in wines and how they are delivered, satisfy regulatory requirements, and create a new source of government tax revenues. In the interests of time, the amendments we are recommending are included in our written submission.
To comply with our international trade commitments, Bill C-311 must meet national treatment obligations. As such, imported wines must be afforded the best treatment provided domestic wines, but only once they have landed in Canada. Bill C-311 meets this obligation, but to be clear, it does not permit foreign wineries to ship directly to Canadian consumers.
Bill C-311 essentially legalizes the following: out-of-province tourists can buy wine at a winery and transport it home either on their person or by having it delivered; out-of-province consumers can order wine online directly from an out-of-province winery and have it delivered. This would permit Canadians to bring back or have delivered wine that was purchased outside of the consumer's home province. As is normally the case, these purchases would be taxed in the province in which the transaction takes place.
While there is limited concern with tourists bringing wine back home with them after an out-of-province trip, provincial governments and liquor boards have expressed concern about the prospect of Bill C-311 extending direct delivery to out-of-province winery wine clubs, online purchases, or liquor board retail stores.
Interprovincial wine shipments from a winery to an adult consumer would require the winery to collect all taxes, levies, and fees on behalf of the province in which the consumer places the order. It It is important to note that in November 2011 the chair of the New York State Liquor Authority testified that direct-to-consumer wine shipping has generated higher local and state sales tax revenues, providing benefits to the state, consumers, and local wineries.
The Province of Ontario, as do most wine-producing provinces, allows its wineries to sell directly to in-province consumers. This has not led to a displacement of wine sales through the Liquor Control Board of Ontario, whose share of retail sales increased from 83% in 2006 to 84% in 2010.
It has been argued that Bill C-311 will stimulate arbitrage opportunities based on varying provincial tax structures across Canada. Differences in tax rates and wine prices are nothing new in Canada, and Bill C-311 will not eliminate provincial authority addressing these concerns.
Finally, the intent of Bill C-311 aligns perfectly with regional efforts to break down trade barriers between provinces. The Trade, Investment and Labour Mobility Agreement between British Columbia, Alberta, and Saskatchewan, the Quebec-Ontario Trade and Cooperation Agreement, and the Partnership Agreement on Regulation and the Economy between New Brunswick and Nova Scotia are examples of efforts by Canadian provinces to seek new partnerships, expand trade opportunities, and collaborate on issues of mutual importance.
In closing, with a few minor amendments Bill C-311 will provide Canadian wineries with a new sales channel that will create a stronger internal market for Canadian wine, a solid base for the industry to sustain its growth ambitions, new opportunities for wine country tourism, new jobs, and enhanced government revenues.