HST holiday little to cheer about for Nova Scotia distillers

Some Nova Scotia distillers are unhappy with the federal government's two-month HST holiday.

Graham Collins, president of Compass Distilling in Halifax, said the decision to make some alcoholic drinks tax-free and not others makes no sense.

He said he is frustrated that spirits sold in bottles are not included in the tax holiday that runs until Feb. 15.

"It's very bizarre," said Collins. "It's inexplicable. Why is it that you can buy a bottle of beer or a bottle of wine or some hard cider and not pay HST on it, and yet [a] spirit is still subject to HST?"

A federal finance department official said in a email that the tax break "has put in place temporary relief on a select list of goods that it considered to be holiday essentials — to help them afford the things they need and save for the things they want."

Collins said the confusion is compounded by the fact his Halifax distillery is also home to a bar that sells mixed drinks in the retail space that also sells bottles of what his company makes.

"Here it's a double whammy because it even applies to cocktails," said Collins. "If we sell a patron a glass of wine, there's no HST on it. If we sell them a cocktail with spirits in it, there's HST applied. 

"So it's very confusing both to us but also to our patrons."

Compass Distilling does benefit from the HST cut for the mixed drinks it sells in cans because the alcohol content is less than seven per cent, the threshold set by Ottawa for mixed "spirit coolers and premixed alcoholic beverages."

Collins is worried people will choose to buy what's exempt from the 15 per cent tax rather than spirits at a time of the year when bottle sales are normally high.

Fellow distiller Riley Giffen, president of Coldstream Clear, shares those concerns. 

His company also sells canned alcoholic drinks that benefit from the tax savings, but he's worried the rush to buy before mid-February will mean a drop in sales when the tax returns.

"Sales could be a little slower as a result of that in the following month," said Giffen, who is more concerned about a drop in sales for his bottled spirits during the tax exemption.

"This is a huge buying season for spirits," said Giffen. "It's the biggest buying season of the year and then we go into the slowest time of the year."

Giffen, also president of the Craft Distillers Association of Nova Scotia, said the group has complained to the federal government about the rules. But nothing has come of it.