Your glass of Canadian wine will cost more every year thanks to the federal budget, says winery president

One of the oldest wineries in southwestern Ontario says this year's federal budget approves an automatic, yearly tax hike on alcohol products that puts domestic wine producers at a competitive disadvantage.

The federal budget ties yearly tax increases to the inflation rate - starting with a two percent duty excise tax this year that's applied at the point of production. 

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Colio Estate Winery President Jim Clark said it's a cost that smaller producers may have to pass on to customers.

"The imports are fishing off our dock and eating our lunch," said Clark. who is also on the board of the Canadian Vintners Association. "It's hard for us to compete with some the major global wine companies."

He said major producers may be able to absorb a tax increase while smaller Canadian producers will have to raise their prices.

"We face having to put prices up where the consumer may not understand and default to lower priced imports as their choice of wine," Clark told Afternoon Drive.

Clark said there was no consultation with the alcohol industry. 

"No, that's part of the problem," said Clark. "This was a complete surprise to not only the wine sector but the beer and spirit sector as well."

How it happened

The Liberal government proposed a two per cent increase to the alcohol excise duty applied to the cost of wine, beer and spirits in this year's federal budget.

It also tied the future rate of tax increases on alcohol to the consumer price index and made it an automatic increase.

The Senate amended the bill, removing the language around automatic increases — but it was ultimately passed with the original wording to tie the yearly increase in inflation. 

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"We could have [pushed our amendment] but it would have gone back and forth," Senate Liberal Leader Joe Day told CBC News, adding that his caucus was frustrated with the automatic tax hike but ultimately agreed to defer.

"We felt in, this particular instance, we had made our statement," 

Costs going up

Clark said that even though the excise duty is now tied to inflation he doesn't predict it will go down if inflation drops.

"No, wouldn't that be wonderful," laughed Clark.

Clark said customers may start noticing an increase in prices this fall. 

"I think it's fair to say that, by sometime in 2018, the cost of alcohol will be going up to the consumers and I think you'll see it across the board."

He wants federal government to understand that that wineries are becoming more than a "sin tax" base with some turning into a tourist destination. 

"We've come a long way and it's a growing segment and we're investing millions of dollars in facilities and vineyards and properties across the country," said Clark.

"And to be seen as just a revenue source tax basis is troubling."