What has caught our attention and brought us here today is the reinstatement of the excise tax. Here's a brief history of that tax.
In 2006, 100% Canadian wines were exempted from excise duty. Ciders fall into the wine class for excise tax purposes. As a result of a complaint filed by Australia, we lost our case before the WTO and the excise tax was reinstated in July 2022.
Our industry thus operated without that tax for about 16 years. Today, many owners don't even know that the tax was previously in force or that it could be again.
The tax is roughly equal to the current net margins on our products. From what we've heard, a compensation program is already being developed. We'd like to bring that program to your attention because, if it isn't generous enough, we can expect that businesses will shut down over the next few years. If businesses in our sector close their doors, that could affect related businesses and sectors, such as apple production and the tourist and restaurant industries.
We have very few diversification options in our sector. Regulation is very strict, and we operate on a vertically integrated apple business model.
I can give you an idea of the potential impact that reinstatement of the excise tax may have. The tax represents approximately $200,000 for my business, Cidrerie Milton. However, my net annual profit is less than $200,000. So I expect to operate at a loss unless a compensation program is developed.
Our demands are very specific, and Cider Canada has previously outlined them to the committee. We are making the same demands here today: that the government increase the budget allocation so the program can support the entire cider industry, extend the program until 2030, and provide a timeframe for the implementation of the excise tax so that it coincides with the program's coming into force and our tax disbursements.
Thank you very much for your attention.
That completes our presentation.