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Canadian provinces cut EU and UK spirits duty

The Liquor Control Board of Ontario has reduced levies on EU and UK spirits by 42%, while Québec will cut taxes on imported spirits next month.

In the Canadian province of Ontario, taxes on EU and UK spirits will drop

From today (1 April), levies on spirits produced in the European Union (EU) and UK will be reduced in the Canadian provinces of Ontario and Québec. The cut is as a result of an audit carried out following the ratification of the EU-Canada Comprehensive Economic and Trade Agreement (CETA).

The cuts cover cost-of-service differentials charged in Ontario and Quebec. The fees have been charged at a flat rate since 2018.

From today, the Liquor Control Board of Ontario (LCBO) has reduced its cost-of-service differential, which will be followed by a reduction of 16.4% by the Société des alcools du Québec (SAQ) on 23 May.

The move has been welcomed by trade group Drinks Ireland, which said the tax cut could offer “new opportunities for Irish whiskey”.

William Lavelle, head of Drinks Ireland, said: “These latest reductions come on foot of audits carried out at the request of the EU under the terms of the CETA agreement, and will open up new opportunities for Irish whiskey brands.

“These reductions have been very welcome in that they have allowed Irish whiskey, particularly premium Irish whiskey products, to be priced more competitively while also delivering more scope to Irish whiskey exporters to invest in enhanced promotion in Canada.

“There remains a number of outstanding discriminatory levies and markups 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.”

While the CETA deal has been in provisional effect since 2017, it still requires ratification by all EU member states. Ireland has not yet approved the deal, but it is expected that lawmakers will vote on the trade deal in Ireland’s Dáil Éireann in the coming weeks.

Drinks Ireland has called on politicians in the country to back the CETA deal.

Lavelle added: “Since the CETA deal came into provisional force, sales of Irish whiskey in Canada have increased a massive 44%, 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 Quebec, the two most populous provinces in Canada.”

In November 2020, the UK and Canada agreed to establish a new trade agreement this year, which will ensure tariff-free access to spirits such as Scotch whisky.

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