Canada’s tax cuts on spirits go down well with Irish whiskey producers

Irish whiskey producers have welcomed sharp reductions in levies on spirits in Canada in line with the Comprehensive Economic and Trade Agreement (Ceta) between Canada and the EU.

The Liquor Control Board of Ontario is to reduce its levies on EU and UK spirits by 42 per cent, while another Canadian province, Québec, is to slash its levies on imported spirits by 16.4 per cent.

"These latest reductions come on foot of audits carried out at the request of the EU under the terms of the Comprehensive Economic and Trade Agreement between Canada and the EU, and will open up new opportunities for Irish whiskey brands," said William Lavelle, head of the Irish Whiskey Association.

The association urged the Government to ratify the agreement, which has been in “provisional effect” since 2017, but has not been ratified by all member states.

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It is expected that Ireland’s ratification of the agreement will be voted upon by the Dáil in the coming weeks. There is opposition to the deal, however, including among members of the Green Party.

Increased sales

Calling on TDs to back the agreement, Mr Lavelle said: “Since the Ceta deal came into provisional force, sales of Irish whiskey in Canada have increased a massive 44 per cent, to 3.5 million bottles in 2019.

“A major contributor to this growth has been the reform of levies, known as the cost-of-service differential, which are imposed by provincial liquor retail monopolies in Ontario and Québec, the two most populous provinces in Canada.”

The cost-of-service differentials in Ontario and Québec were initially changed from an ad valorem (per value) basis to a flat charge in 2018. This particularly benefited premium-priced Irish whiskey.

"There remains a number of outstanding discriminatory levies and mark-ups in place across Canadian provinces, but the Ceta agreement offers the best path to address these outstanding matters and that's why we need Ireland to finally ratify the agreement," added Mr Lavelle.