re)

i, ‘AN DUO BLAST FEDERAL POLICY

importers face
double tax on
de-aicoholized
wine products

CURRENT federal government Sevies on de-alcohoiized
wine are undermining the attempis of local importers to
provide the public with viable alternatives to alcoholic bev-

erages.

Malcolm and Linda Giilis of
North Vancouver-based  hfalinda
Distributors Inc, face federal tar.
iffs and excise duties cf close to 37
per cent on their company's de-
alcoholized wines becaiz:se ihe pro-
ducts, which are imported from
Australia, are taxed both as a wine
and a grape juice by two different
arms of the federal government.

“Tax it as a wine or as 2 grape
juice but not as both,’’ Malcolm

Ww Gillis said in a recent interview.

The federal government policy,
he said, makes it extremely dif-
ficult for his company to do

FAC
“it really bugs me when we
have all these alcohol and
awareness programs and
governiment urging everyone
not to drink...but then they
make it extremely expensive
for importers to bring in an
alternative.’’

—-importer Linda Gillis

business and runs counter to the
government's message of controil-
ing the social wreckage wrought by
alcohol abuse.

Canada Customs considers de-
alcoholized wine (0.5 per cent
alcohol content or less) a grape
juice and therefore subject to a
17.5 per cent import duty.

But the federal Excise Tax Act
classifies the product a wine and
therefore subject to appropriate
excise duties and the federal sales
taxes applicable to alcoholic bev-
erages. The two add another 19 per
cent to Malinda’s products.

In the U.S., federal government
levies on de-alcoholized wines are
about 366 times less than those
charged in Canada: three-tenths of
a cent per litre compared with
$1.10 per litre in Canada.

Prior to the recent  federa!
budget, de-alcoholized beer was
also a victim of the double tax —

By TIMOTHY 8

News Reporter

first as a soft <dlrink, sccond as a
beer — but the Federal government
dropped the 17.5 per cent soft
drink duty in the April budget

The government ceturned the
duty on de-alcoholized beer to ap-
proximaicly five per cent, the
amoun: charged prior to the Jan.
1, 1988 institution of the ‘Harmo-
nized’ customs Cariff system, Sales
tax was also raised on the product
from 13 per cent general rate to the
$9 per cent currently charged on
alcohol and tobacco products.

**So they have celieved the beer
problem, but wine is still in trou-
ble,"" said Canada’s Non-alcoholic
Beer and Wine Distributors
Association ({NBWDA) president
Danny Steele. ‘*We only — seil
20,000 cases of de-alcoholized wine
annually. So it’s not a big deal for
them (the federal government).
They are not making 2 lot of
money out of it.’"

He said by comparison the ex-
cise and federal sales taxes on reg-
ular wine run to approximately 26
per cent.

But Department of Finance of-
{'.ials said the duty on = de-
alcoholized wines were not simi-
larly reduced because the realiza-
tion that the product had never
been classified as a wine by
Canada Customs and therefore
had always been charged the 17.5
per cent import rate for grape juice
came too late to mixe the change
in the 1989 budget.

In correspondence with
NBWDA, John McDermid,
Minister of State for Privatization
and Regulatory Affairs, has prom-
ised to re-examine the duty charg-
ed on de-aicoholized wine in the
next budget.

Malinda is currently awaiting an
initial 26,000-bottle shipment of

See Importers

H AND WEST VANCOUVER