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Tuesday, May 21, 2024
New tax laws could bring boom in breweries

Changes to provincial laws for small breweries could mean an even bigger boom in craft beer production in Niagara.

The changes, announced Monday at Amsterdam Brewery in Toronto by Ontario’s Minister of Finance Charles Sousa, will see a reduction in beer tax rates from 90 cents per litre to 40 cents for microbrewery beer sales and remove tax on up to 10,000 litres of beer per year for promotional purposes at on-site retail stores.

As well, there will be an increase in government support for brewers with taxable sales between 75,000 and 200,000 hectolitres, and the worldwide production eligibility will double from 150,000 to 300,000 hectolitres.

Small breweries will also be able to have a restaurant or bar at each of their manufacturing sites.

Chris Pontsioen, chief executive officer of Silversmith, said the new laws will allow craft beer brewers to make a “real expansion” in Ontario by allowing them to retain more earnings.

“It's going to allow us to hold to more of our cash resources so that we can grow … it means we can reinvest that money in the community,” he said.

“So essentially by allowing us to retain more of our earnings we get to reinvest that in the growth of our business and then, generally speaking, in craft brewing, growth means jobs — it certainly does here — and that's good for the brewery, it's good for the community, and good for everybody.”

“Everybody wins.”

The province said as part of the effort it will also increase the amount of grocery stores that carry beer to 450 in time, with at least 20 per cent of beer shelf space reserved for small brewers' products.

As of Tuesday, the province announced 87 new grocery stores will be able to sell beer and cider.

As well, the province said craft breweries will receive improved product placement, increased shelf space and “other marketing practices” at Beer Store locations.

“It is a great day for the craft beer industry and a great day for Ontarians who enjoy locally made craft beer,” said Scott Simmons, president of Ontario Craft Brewers.

Craft beer is a rapidly expanding sector in Ontario, employing thousands of people in direct brewery jobs. The industry generated more than $89 million in sales at LCBO stores during 2016 and 2017.

Currently, there are 250 craft breweries currently operating across Ontario, approximately 133 of which sell product via the LCBO network.

In 2017, the craft beer industry estimated that there was more than $370 million in sales of craft beer in Ontario, up from $240 million in 2015.

Sousa said Ontario’s small breweries “support local agriculture, spur economic growth and deliver new and exciting products to consumers.”

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