Select Standing Committee on Finance and Government Services Pre ...

Select Standing Committee on Finance and Government Services Pre-Budget 2017 Consultation Submission October 2016

ABOUT THE BRITISH COLUMBIA WINE INSTITUTE History - The Move to a Quality-Driven Wine Industry The British Columbia Wine Institute (BCWI) was created by an act of the provincial legislature, the BC Wine Act, in 1990. It was conceived as a component of a strategic plan of industry and government to create an internationally competitive wine industry. The strategy included the removal of labrusca and hybrid grape varieties and replanting vineyards to vinifera varietals, establishing an industry based on premium wine production. The BCWI oversaw the development of the BC VQA program and conducted research and development (R&D) on behalf of the industry. In 2006, the BCWI members voted to become a voluntary trade association (the BC Wine Institute Society) with member fees based on sales in BC of 100% BC wine. The BC VQA program and the regulatory oversight would go to the BC Wine Authority and the Research & Development and Health & Safety committees would move to the BC Wine Grape Council. Role – Shaping the Voice of an Industry Since 1990, the BCWI has played a pivotal role in taking BC's wine industry from a vision to an internationally recognized niche region producing premium wines and providing exceptional wine tourism experiences. The BCWI markets the wine and regions of BC; delivers quality trade, media and consumer tastings; and acts as the voice of BC's wine industry by advocating to government on behalf of and industry that contributes $2 billion in provincial economic growth annually. The BCWI represents all wineries in British Columbia to grow the premium market share for the Wines of British Columbia (certified 100% BC grape wines), while driving awareness of our world-class wines and tourism product - currently drawing 800,000 visitors with $476 million in tourism and tourism employment related economic impact every year. Social Responsibility The British Columbia Wine Institute is dedicated to establishing the Wines of British Columbia (certified 100% BC grape wines) as the preferred premium wine brand in BC; creating a business climate that encourages investment in the quality of certified 100% BC wines; providing leadership on key industry issues; and assisting members in reaching their full potential. We strive to enhance the environment for the responsible consumption and enjoyment of wine at our member wineries and various retail partners across the province. Members of the BCWI are proud of their wines and are committed to ensuring their wines are promoted and enjoyed responsibly by those adults who choose to consume them for the continued enjoyment and prosperity of the BC wine industry. INTRODUCTION BCWI welcomes the opportunity to provide comments to the Select Standing Committee on Finance and Government Services, as part of the pre-budget consultation process for Budget 2017. As the province strives to implement a robust growth strategy which supports sustainability and innovation, it is timely for government to implement measures which will enable the certified 100% BC grape wine industry to seize

…(continued) • British Columbia Wine Institute • 107 – 1726 Dolphin Avenue, Kelowna, BC V1Y 9R9 • • WineBC.org • Tel: 250.762.9744 • Fax: 250.762.9788 • WineBC.com •

rapidly expanding markets across Canada and beyond our borders, create a better environment for private sector investment and enhance the long-term drivers for jobs and economic growth. BRITISH COLUMBIA WINE INDUSTRY The British Columbia grape wine industry produces certified 100% British Columbia (BC VQA and other 100% BC) wines, as well as International Canadian Blended (ICB) wines. Both are significant economic drivers. A 2013 national economic impact study concluded that the BC wine industry contributes $2.5 billion annually to the BC economy. For every bottle of wine produced in the Province, there is $42 of economic impact generated. BC welcomes over 800,000 visitors every year through the wine economy that generates $476 million in tourism and tourism employment related economic impact. More than $298 million in federal and provincial taxes and liquor board markup is generated by the wine industry in BC each year. In taxes alone, the BC Wine Industry contributes $222 million. BC wineries capture greater revenue than most agri-food products, by not only crushing grapes and producing wine, but also by packaging, marketing and sales. From vineyard development and grape cultivation to the final sale, wine is a highly complex process that involves numerous suppliers, distributors and service providers throughout the value chain, compounding the economic benefits. Our domestic industry is reliant upon BC soil and is firmly rooted in rural economies across the province; however, its impact extends well beyond direct sales and employment of BC’s 260 grape wineries and 930 vineyards, as strong linkages to tourism, retail sales, bars and restaurants support more than 10,000 jobs. EXECUTIVE SUMMARY Agri-tourism in the province of British Columbia offers farmers tremendous opportunity to add value to their operations, enhance local economies and educate visitors. Wine-based agri-tourism supports a visitor economy in wine growing regions. Wineries are a catalyst for tourism in many regions. A 2011 report on the economic impact of the wine and grape industry in Canada estimated that there were 800,000 wine-related tourists having a total impact of wine-related tourism of $476,428,000 in British Columbia. Estimates suggest that for every bottle of wine produced in the Province, there is $42 of economic impact generated. A strong, well-known cluster of wine producers entices visitors and attracts export dollars into their communities and regions and contributes to BC’s $13 billion+ tourism economy. A healthy tourism and hospitality industry contributes provincial and local taxes, creates jobs, enhances civic pride and provides visitors and residents with leisure activities. The Tourism sector is fiercely competitive - tourists have many global destinations to choose from. The success of a wine-based agri-tourism sector depends on farmers growing the finest quality grapes, wineries practicing advanced, high quality wine-making processes PLUS providing unique, memorable and remarkable visitor experiences. BC’s wine growing regions need government to support the success of BC’s wine-based agri-tourism sector while minimizing the hurdles and obstacles they face. One such obstacle is the high property tax classification for wineries growing and producing certified 100% BC grape wines. THE CHALLENGE BC grapegrowers producing wine on their property face much higher property tax rates (almost six times) than other types of agriculture producers (e.g., dairy, fruit, fish). This is because the BC Assessment Authority classifies wineries/cideries as ‘Light Industry’ (Class 5) rather than a ‘Farm’ (Class 9). However, a review of BC’s farm related terms clearly identifies viticulture as a farming activity. As example, a small emerging 100% BC winery (that used to grow and process a different product) now faces an additional $4,000 annual tax increase as a result of reclassification of their farm buildings to ‘light industry’. The property tax of another larger landbased winery went from $1,200 to $26,000/yr. Page 2 of 3

THE RECOMMENDATION The BCWI, in support of a BC Chamber of Commerce recommendation, endorses the expansion and development of BC’s 100% BC wineries engaged in agri-tourism by providing recognizable and measurable tax relief that offsets the light industrial assessment applied to buildings on agricultural properties only when the activity is related to certified 100% BC alcohol production. The BCWI strongly recommends provincial tax credit (relief) to offset the higher property taxes for certified 100% BC wineries/cideries/distilleries offering unique, authentic experiences to visitors in BC to align with government priorities, especially those related to scaling up innovative industries, investing in environmental sustainability, developing and growing markets and creating quality job opportunities for young British Columbian, all of which will support a sound public investment towards supporting economic prosperity.

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