While some shoppers and store owners are celebrating the HST ‘tax holiday’ from the federal government, not all industries are feeling the holiday spirit.
“I wasn’t overly surprised. The spirits industry gets left out of a lot of things,” Ben Murphy, president of Murphy’s Law Distillery in Elmira, told CTV News on Friday.
The temporary HST break only applies to certain items from Dec. 14 until Feb. 15.
Although beer, wine, cider and some spirits made the list of eligible items, pre-mixed alcoholic beverages and coolers with over seven per cent alcohol by volume (ABV) do not qualify.
“Everything that we’re buying currently is also HST exempt in terms of the ingredients,” Murphy explained. “We’re accruing all these HST owes to the government, but there is no ITC – which is the income tax credit – to counterbalance that. So, our next HST bill is going to be colossal.”
In an email to CTV News, a spokesperson for Department of Finance Canada said, in part, the relief is for “a select list of goods that is considered to be holiday essentials.”
Murphy worries the decision to leave spirits out will encourage potential customers to buy other products, in order to take advantage of the savings.
“We completely understand the fact that you have to go and take advantage of the situation currently, but there goes the new customers that we could be attracting,” he said. “It’s not helpful.”
Balancing act
For some businesses that act as restaurants, breweries and distilleries, like Willibald Farm in Ayr, it has meant combing through the shelves to find which products get the HST break.
“At the end of the day, we just kind of accept the fact that some of the products on our shelf are going to be 13 per cent cheaper [and] will likely just sell more, given that they are essentially at a discounted rate for the next two months,” said Cameron Formica, co-founder of Willibald Farm Distillery & Brewery. “It adds another layer of confusion when we also make canned cocktails under seven per cent [alcohol]. Those on our menu are exempt from tax. But then our stirred cocktails, which include spirits we make and might actually be seven per cent, but because they’re made from a spirit, that’s not exempt.”
The latest drop in the bucket
Many distillers who spoke with CTV News said they’re used to feeling left out.
When the provincial government expanded the list of retailers that can sell alcohol, spirits were also left off the list of allowable beverages.
The Ontario Ministry of Finance said not including spirits in the expansion is “aligned with other Canadian jurisdictions.”
“I think a lot of that stems back from ideologies, that [started during] prohibition, that have never been shaken,” Formica said.
