The Cap-Acadie Chamber of Commerce and 11 other New Brunswick Chambers of Commerce are taking a stand on the proposed tax increase for craft alcohol producers. A joint letter has been sent to Finance Minister Ernie Steeves.
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 & Spirits 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.”— Paul Henderson, Vice-President ANBL
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.”— Paul Henderson, Vice-President ANBL
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, PDG, Fredericton Chamber of Commerce
John Wishart, PDG, Chambre de commerce pour le Grand Moncton
Vanessa Coggan, Directrice générale, Sussex & District Chamber of Commerce
Julia Halbleib, Directrice générale, St. Andrews Chamber of Commerce
Anthony Azard, PDG, Chambre de commerce Cap-Acadie
Cathy Pelletier, Directrice générale, Chambre de commerce région Edmundston
Annick Robichaud Butland, President, Albert County Chamber of Commerce
Julie Pinette, Director General, Chambre de Commerce Chaleur
Jen Gendron, Hampton Area Chamber of Commerce
Gilles Beaulieu, PDG, Chambre de commerce de la Vallée
Cheryl McGraw, Directrice Générale, La Chambre de commerce et du tourisme du Grand Caraquet
Gaétane Duval, Présidente, Chambre de Commerce Haut-Madawaska
Sheri Somerville, PDG, Chambre de Commerce Atlantique
