• Letter to Hon. Ernie Steeves, Minister of Finance Regarding Proposed Tax Increase on Craft Alcohol Producers

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    Hon. Ernie Steeves, Minister of Finance
    Chancery Place
    P. O. Box 6000
    Fredericton, NB E3B 5H1
     
    Via email: ernie.steeves@gnb.ca
     
    Re: Proposed Tax Increase on Craft Alcohol Producers
     
    Dear Minister Steeves:
     
    We are writing today jointly as chambers of commerce throughout New Brunswick on behalf of our many members in the craft alcohol production industry. We are extremely concerned with the ANBL’s board of director’s recent decision and subsequent announcement that they are abandoning the crown corporation’s 3-Year Local Producer Strategy only one year into the strategy (which was supported by craft producers).
     
    Without proper notice or consultation, this decision appears to be arbitrary and placing a much higher burden on craft producers than the strategy entailed. The strategy states:
     
    Beginning in October 2022, we will implement incremental increases to our markup structure of 2% year over year for the next 10 years across all local categories except ready-to-drink. The  goal of having incremental increases instead of one large increase is to help your business adjust over the long term.
     
    Producers agreed to this predictable tax increase plan, but last week, they received a letter from ANBL VP Paul Henderson that stated, in part:
     
    This adjustment to the schedule for rate increases means that the average two percentage points increase for local producers within Micro-breweries, Cider, Wine & Spirts category will go into effect on July 17, 2023. We are making this adjustment to the timing of this increase to coincide with a price increase for domestic beer products which will take effect in July simultaneously. There will be no change for coolers/ready to drink products at this time.
     
    Additionally, the markup structure for local producers will be standardized to a percentage rate instead of a dollar per litre rate to better align with other jurisdictions.
     
    While the change in timing with very little notice is problematic, the change in markup structure is a critical piece here and means that the actual increase in price will be much higher than the planned 2%. According to the industry, craft products in New Brunswick will now see an increase in tax on their products ranging from 25% to 75%. We would be happy to meet at your convenience to further explain how the proposed changes will produce a much higher tax burden on small, local producers than the 2022 strategy intended.
     
    The letter from VP Henderson also states:
     
    ...it is still your choice whether you maintain your current case costs, and pass the adjustment  on to the customer, or hold your retail prices and adjust your case costs.
     
    Whatever choice producers make – with grossly inadequate notice – will make them less competitive in the marketplace. Essentially, they can either choose to take less money per case from ANBL or have the increase added to their shelf price at ANBL, meaning they will sell fewer products – also affecting their bottom line.                    
     
    This decision at this time is particularly confusing given that ANBL is in the midst of a review of their local producer policy, including involvement with ANBL Craft Advisory Group, which includes producers themselves. Arguably, the tax structure is the most critical piece of any such strategy and therefore it is our position that any deviation from the 2022 strategy be delayed until that review is complete, to work through the review with industry and other stakeholders, and then propose an accurate, transparent process for implementation of any changes that are recommended.
     
    After years of pandemic, inflation, labour shortages, increasing minimum wage, increasing interest rates and supply chain challenges, this is not the time for a drastic, surprising tax increase that will need to be borne by the producers, the hospitality sector and the New Brunswickers who have chosen to support local products.
     
    The June 2022 tabling of Auditor General Paul Martin’s report regarding ANBL’s role in the development of the province’s liquor industry reinforces our position that ANBL must participate and engage in the development of the liquor industry in the province. We submit that at a minimum this means engaging with industry on major changes in policy such has been proposed by the board of directors of ANBL. The fact that ANBL has already established an advisory group for this exact purpose gives the appearance that ANBL has been doing just that prior to the board of directors' current interjection into the process.
     
    Sincerely,
     
    Krista Ross, CEO, Fredericton Chamber of Commerce
    John Wishart, CEO, Chamber of Commerce for Greater Moncton
    Vanessa Coggan, Executive Director, Sussex & District Chamber of Commerce
    Julia Halbleib, Executive Director, St. Andrews Chamber of Commerce
    Anthony Azard, CEO, Cap-Acadie Chamber of Commerce
    Cathy Pelletier, Executive Director, Edmundston Region Chamber of Commerce
    Annick Robichaud Butland, President, Albert County Chamber of Commerce
    Julie Pinette, Director General, Chaleur Chamber of Commerce
    Jen Gendron, Hampton Area Chamber of Commerce
    Gilles Beaulieu, CEO, Valley Chamber of Commerce
    Cheryl McGraw, Directrice Générale, La Chambre de commerce et du tourisme du Grand Caraquet
    Gaétane Duval, Chair, Chambre de Commerce Haut-Madawaska
    Sheri Somerville, CEO, Atlantic Chamber of Commerce
     
     
    cc: Hon. Blaine Higgs, Premier, Province of New Brunswick
    cc: Hon. Hugh J. A. (Ted) Flemming, Minister, Justice
    cc: Hon. Kris Austin, Minister, Public Safety
    cc: Hon. Jeff Carr, Minister, Transportation and Infrastructure
    cc: Hon. Margaret Johnson, Minister, Agriculture, Aquaculture and Fisheries
    cc: Hon. Bill Hogan, Minister, Education and Early Childhood Development
    cc: Hon. Arlene Dunn, Minister Responsible, Economic Development and Small Business, Opportunities  
          New Brunswick, and Immigration, Minister of Aboriginal Affairs
    cc: Hon. Gary Crossman, Minister, Environment and Climate Change
    cc: Hon. Daniel Allain, Minister, Local Government and Local Governance Reform
    cc: Hon. Bruce Fitch, Minister, Health
    cc: Hon. Jill Green, Minister, Service New Brunswick, Minister Responsible for Housing
    cc: Hon. Trevor Holder, Minister, Post-secondary Education, Training and Labour
    cc: Hon. Tammy Scott-Wallace, Minister, Tourism, Heritage and Culture, Minister Responsible for
          Women’s Equity
    cc: Hon. Mike Holland, Minister, Natural Resources and Energy Development
    cc: Hon. Réjean Savoie, Minister Responsible for the Regional Development Corporation
    cc: Hon. Glen Savoie, Minister Responsible for Francophonie
    cc: Richard Ames, MLA, Carleton-York
    cc: Andrea Anderson-Mason, MLA, Fundy-The-Isles-Saint John West
    cc: Kathy Bockus, MLA, St. Croix
    cc: Michelle Conroy, MLA, Miramichi
    cc: Ryan Cullins, MLA, Fredericton-York
    cc: Mike Dawson, MLA, Southwest Miramichi - Bay du Vin
    cc: Bill Oliver, MLA, Kings Centre
    cc: Dorothy Shephard, MLA, Saint John Lancaster
    cc: Greg Turner, MLA, Moncton South
    cc: Ross Wetmore, MLA, Gagetown-Petitcodiac
    cc: Mary Wilson, MLA, Oromocto-Lincoln-Fredericton
    cc: Sherry Wilson, MLA, Moncton Southwest
     
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