A fair tax

Winegrowers seek council support

Representatives from the Prince Edward County Winegrowers Association (PECWA) and the Ontario Craft Wineries (OCW) made a deputation to council on February 23 seeking its support in their effort to get a fair tax structure for their industry. Currently, wineries pay the province a 6.1 per cent tax for any sale at the farm gate, and a 35 per cent import tax on any sales through the LCBO. Richard Linley, OCW president, calls this “Prohibition- era tax policies” that disproportionally affect small to medium wine producers, and stifle the economic activity that could otherwise be introduced into the community. Linley, together with PECWA Chair Caroline Granger and Dan Sullivan of Rosehall Run Winery, made the deputation as a high-level view on the impact the COVID-19 pandemic has had from an economic standpoint. “When we spoke to Council, it was to educate them on the current challenges and what we think the potential renewal and recovery will entail with respect to the provincial policy, and what we need to be successful in the future,” said Linley. “It was also to seek their support for changes we are seeking at the provincial level.”

Eighty per cent of County wineries have reported a negative financial impact in excess of $50,000 in their business, and close to a quarter of them are struggling to pay staff wages. The near-term future prospects are equally daunting, with half of wineries expecting to face more employee layoffs, a third considering temporary closure, and five per cent contemplating closing permanently. Another complicating factor is loss of revenue from licensees such as restaurants that have been forced to close their doors, quite often with outstanding bills not paid. “There’s been a decrease in sales and revenue, and increase in costs related to PPE. Visitor traffic and tasting room sales are down, weddings and events are cancelled. And there’s bad debt with licensee partners, given that they have had to close too,” explained Linley.

Caroline Granger of the Grange of Prince Edward Vineyards has seen the effects of the pandemic on her business. “It has been a very, very difficult year for us. We’re used to welcoming visitors with open doors. Our business plan is built on a few pillars, but part of it is wine sales at the farm gate and the LCBO, and also on the hospitality. We do a lot of interactive tours. We host a lot of events, and last year all of that disappeared,” she said. “Twenty-twenty was a challenging harvest in terms of manpower. We couldn’t access additional harvest labour and feel confident to keep the people working on the farm safe. So we harvested with a tiny crew. I barely had enough hands to pick our crop.” As it was, some of the crop was lost when October rains came, leaving some reisling grapes on the vine. One of Granger’s projects for last year was to add a botanical infusion to some of her wines, but there were no extra workers to even think about experimentation. However, she was able to maintain the current staff and meet payroll, although there were some sleepless nights with worry. She is particularly incensed by the additional expense due to the 6.1 per cent farm gate tax. “No other farm gate product has an additional tax beyond HST, and when we sell in the only other retail channel we pay the same tax as imported wine. They did not import my wine, so I should not pay an import tax.” She said that most small wineries rely heavily on farm gate sales, so tax relief in that regard would have a broad benefit to practically every winery in Ontario, but the most dramatic to the smaller wineries because it affects the bulk of their sales.

There have been some bright spots in the year, and Granger credits her daughter and winery partner, Maggie. She has used her creativity and vision to pivot to an online presence, including tasting sessions via Zoom. “We are shipping tastings to people instead of people coming to us. It’s not the same dynamic experience, but we’ve had some really fun interactions with different groups of people,” said Caroline. “Online orders keep flowing in. It’s not the same as a season, but it is heartwarming to see those orders and to know there are people who are still keen to try the wines.” Caroline said it is difficult to predict what is going to happen in a month, and near impossible to forecast what the coming season will be like. “Startup of the vineyard is critical,” she said. “A successful season will largely depend on how safe it is for a business to open and how comfortable people feel when Ontario reopens. Things likely won’t return to normal until we have the pandemic under control.”