Feeling the pinch of the province’s production levy, Saskatchewan brewers are asking for a bit of tax relief.
Saskatchewan breweries currently pay more to produce craft beer than their counterparts in Alberta and Manitoba.
“A production tax is pretty common in the brewing industry; every province has one. The unfortunate thing is Saskatchewan has one of the highest rates. It’s almost double of our closest neighbours,” said Mark Heise, president of the Saskatchewan Craft Brewers Association and Rebellion Brewing Co.
While Saskatchewan breweries have been feeling additional financial pressure because of the novel coronavirus pandemic, lobbying the government to lower the tax has been a four-year effort.
“The government has never said ‘no’ or disagreed, but unfortunately we’ve never been able to make that change,” Heise said.
Saskatchewan locals have now joined the breweries in calling for a reduced tax, with over 1,300 people signing an online petition to help get the attention of the provincial government.
“This should have been fixed four years ago.”
Producing up to 20,000 barrels of craft beer in Saskatchewan costs local brewers anywhere from $0.1715/L to $0.34/L depending on their production level.
In comparison, Manitoba craft brewers pay around $0.107/L and in Alberta craft brewers pay $0.10/L to $0.14L depending on the amount of barrels produced.
“We’re not asking for a handout, we’re asking the government to not pull so much money out of our pockets,” said Heise.
While the government of Saskatchewan was unable to provide how much revenue it makes off the craft beer production levy, Heise says it generates around $500,000 a year from 20 Saskatchewan breweries.
If the government were to reduce the levy to remain competitive to Alberta and Manitoba, it would cost the province “$250,000 at most” said Heise.
In comparison to the $478 million the Saskatchewan Liquor and Gaming Authority (SLGA) made in 2019, doing so would cost SLGA 0.10 per cent of its annual revenue.
“It’s pretty damn small,” Heise said.
“At the same time, about 20 breweries across Saskatchewan would be able to pool that money and it would make all the difference in the world.”
The collection of the production levy has been put on pause during the province’s state of emergency due to COVID-19. Local breweries will eventually have to pay it back.
However, a spokesperson for the SLGA says Saskatchewan’s program has its perks.
“Craft producers that sell their products directly to consumers, retailers and permittees do not pay markup. Saskatchewan is one of few jurisdictions that allow direct sales to all of these customer groups,” said David Morris in a statement.
“By comparison, a large national brewery pays a markup of $1.87/L when they sell their beer.”
While all provinces charge some form of production levy, “Saskatchewan’s craft breweries enjoy among the lowest rates in all of Canada,” Morris said.
The Saskatchewan government says they are not considering making a change to the production levy at this time.
Heise sees this as a missed opportunity.
“People still love beer and want to keep drinking beer. And to me this is something that should have been changed a long time ago.”