FOR IMMEDIATE RELEASE: August 3, 2012
SCHUMER: YATES COUNTY WINERIES MISSING OUT ON CANADIAN CUSTOMERS - BURDENSOME TAXES AND FEES COSTING NY WINERIES BARRELS OF BUSINESS – SCHUMER PUSHES CANADIANS TO STICK TO COMMITMENT TO ADDRESS RESTRICTIVE TAX REGIME IN TRADE TALKS
Tourists Spent $60 Million in Yates County in 2011, But NY Wine Sales Undermined by Taxes Up to 100% at Canadian Border - Eliminating Wine Tax Disparity Between Canada and the US Would Be Windfall for Winery Businesses
Schumer Asks U.S. Trade Rep. to Prioritize Commitment from Canadian Leaders to Address Wine Tax in Trade Negotiations— Critical to Prioritize Eliminating Wine Taxes That Put NY Wineries at Competitive Disadvantage
Schumer: Canadians Should Fulfill Commitment and Uncork Potential for Yates County Wineries
Today, U.S. Senator Charles E. Schumer renewed his call for Canadian and American officials to commit to launch negotiations to eliminate restrictive Canadian wine taxation policies that put wineries in Yates County, and across New York State, at a competitive disadvantage. Canadians and other tourists contribute about $1.2 billion to the Rochester-Finger Lakes region annually, and $60 million to Yates County, but wine sales along the Keuka Lake and Seneca Lake Wine Trails are undermined by onerous Canadian taxes and fees assessed on New York wines purchased by Canadian residents returning from travel in the U.S. In contrast, when New York tourists travel to Canada, the United States does not impose high taxes on wine upon return, which affords Canadian wineries a huge business opportunity.
During a personal meeting with Canadian Ambassador Gary Doer in April, the Ambassador requested that Schumer help advocate for the Canadians to be invited to join the Trans-Pacific Partnership (TPP) trade negotiations. In that same meeting, Schumer secured a commitment from the Ambassador that if Canada joined Trans-Pacific Partnership (TPP) negotiations, the Canadian government would launch formal talks to terminate Canada’s restrictive wine taxation policies. Elimination of Canada’s anticompetitive wine tax practices would provide a massive boost to winery and tourism businesses in Yates County and across the Rochester-Finger Lakes region, and much of upstate New York.
Last month, the White House notified Congress of its intent to invite Canada into TPP talks, triggering the opening of a three month consultation period, after which Canada will be able to formally join TPP talks. Schumer is urging the Canadian Ambassador to make good on his personal commitment to negotiate a resolution of the wine tax disparity in the context of these talks. Schumer also has asked U.S. Trade Representative Ron Kirk to commit to specify elimination of high wine taxation barriers as a TPP negotiating objective. It is estimated that some New York wineries business would double if the Canadian tourists that already visit the area’s wineries could bring New York wine back to Canada without being hit with huge taxes and fees.
“Yates County wineries are missing out on barrels of business because of burdensome taxes on Canadian visitors to our wineries. That is why I have secured a commitment from Canadian leaders to address this restrictive wine tax in new trade negotiations, and am urging the Canadian government to fulfill this commitment and uncork potential for winery businesses in Yates County and across upstate New York,” said Schumer. “In April, I met with Canadian Ambassador Gary Doer and he agreed to work with Administration officials to eliminate barriers to equitable cross-border commerce in wine, if Canada joined key trade talks. Now that Canada has entered into consultations with the United States to enter these talks. I am urging the United States and Canada to use the consultation period to formalize that personal agreement to eliminate Canada’s high wine tax that discourages Canadian tourists from buying New York wines and act as a barrier to business growth along the Seneca Lake and Keuka Lake Wine Trails.”
Schumer noted that wine purchased by Canadian residents returning from day or weekend travel to the U.S. is subject to a series of onerous federal and provincial taxes and fees much higher than corresponding U.S. duties. Specifically under current law a United States citizen who visits a Canadian winery is able to purchase two bottles of wine duty free, with any additional purchases of wine only subject to a 3 percent duty. Conversely, a Canadian visitor to a New York winery can only bring back two bottles of wine duty free, before being subject to a $0.62 (Canadian) federal tax per liter, and an additional 39.6 percent provincial excise tax. These Canadian charges can easily add up to 50 to 150 percent of the value of the wine – which means Canadian visitors, more often than not, come to taste New York wines but not to buy.
Schumer stood with leaders of the wine industry in the Finger Lakes region, and vineyard owners at Keuka Spring Vineyards in Penn Yan, Yates County to announce renewed efforts to eliminate restrictive Canadian wine taxation policies that put New York wineries at a competitive disadvantage. Schumer was joined by Mike Linehan, President of the Yates County Chamber of Commerce; Skip Jensen, Yates County Farm Bureau field advisor; Ted Marks, Atwater Estate Vineyards proprietor; Steve Shaw, owner of Shaw Vineyard; Josh Trombley and Meghan Gillett from Keuka Restaurant; Kathy Waye, Executive Director of Alumni at Keuka College; and David DeMarco, owner of Seneca Shore Wine Cellars. Many of the vineyards in the region are family-owned small businesses that have garnered local, national and international recognition for their high quality wines. Keuka Spring Vineyards, for instance, has been owned and run by the Wiltberger family for more than three decades, and their wines have won numerous “Best in Class” awards, including the Governor’s Cup award for its 1998 Cabernet Franc, the Chairman’s Award at the Riverside International Wine Competition in California for its 2011 Riesling, and twice won “Best Red and Double Gold” at the New York State Fair Wine Competition for its Miller’s Cove red. On average 90 percent of visitors to Keuka Spring’s tasting room make a wine purchase, however few if any of Keuka Spring’s Canadian visitors purchase at anywhere near this rate.
“We’re excited about Senator Schumer’s visit to our winery and the chance to talk about a better opportunity to serve our Canadian visitors. Because of current tax and trade restrictions it is extremely difficult for Canadian visitors to purchase wine and take it across the border to enjoy in their homes,” said Judy Wiltberger, owner of Keuka Spring Vineyards.
At Schumer’s request, US Trade Representative Ron Kirk has raised the issue of Canada’s protectionist wine taxation policies with Canadian counterparts. Because of high taxes and fees, Canadian tourists come to taste New York wines, but not to buy. Schumer is asking USTR to adopt as a specific negotiating objective the elimination of inequitable wine taxation practices that are impeding cross-border commerce. Schumer also is requesting that both USTR and the Government of Canada commit to begin formal negotiations on this issue at Canada’s first TPP negotiating session later this year.
The state’s wine industry has proved to be one of New York’s most resilient. In each of the past 10 years the New York wine industry has experienced 10-15 percent annual growth. The retail value of all this production is estimated to be $1.1 billion annually, which is a figure that is likely to rise because New York’s growers are increasingly producing higher value wine. This industry has a particularly powerful impact on New York’s rural economy by increasing tourism at a rate of 4.1 million people annually and adding a $6B boost to the state’s economy every year. Overall, the industry directly employs 36,000 people in New York. New York State is the third largest producer of wine by volume in the country, with over 200 million bottles produced annually, 255 wineries statewide, $420 million in sales, and 15,000 employees.
Canada will formally join the TPP negotiations later this year. The TPP negotiations were launched in 2009. Currently, the negotiations include Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam, as well as the United States. Canada and Mexico have been invited to join the negotiations and are expected to formally do later this year.
Copies of Sen. Schumer’s letters appear below:
Dear Ambassador Kirk,
I write today to bring to your attention restrictive Canadian wine taxation policies that undermine economic growth in upstate New York and put New York wineries at a competitive disadvantage. As the United States prepares for Canada’s formal entry into the Trans-Pacific Partnership negotiations, I respectfully request that USTR commit to specify elimination of high wine taxation barriers as a TPP negotiating objective.
As you know, U.S. residents returning from a short visit to Canada are permitted to bring two bottles of wine duty free into the United States. Canada allows no commensurate duty exemption. In fact, wine purchased by Canadian residents returning from day or weekend travel to the U.S. is subject to a series of onerous federal and provincial taxes and fees. These charges can easily add up to 50 to 150 percent of the value of the wine – which means Canadian visitors, more often than not, come to taste New York wines but not to buy.
Mr. Ambassador, you and I have spoken previously regarding Canada’s protectionist wine taxation policies, and I appreciate that you have raised the issue with your Canadian counterparts. However, to date, there has been no progress on eliminating the wine tax disparity between New York and bordering Canadian provinces. The status quo is not acceptable.
I understand USTR is beginning a 90-day consultation period with Congress to solicit views on U.S. negotiating objectives with respect to Canada. I respectfully request that, during this period, USTR meet with my office to discuss the issue of Canada’s protectionist wine taxation policies. My expectation is that the United States will adopt as a specific negotiating objective the elimination of inequitable wine taxation practices that impede cross-border commerce.
The TPP negotiations present a unique opportunity for the United States and Canada to come to an agreement to terminate provincial wine taxation schemes that discourage Canadian tourists from buying N.Y. wines, undermine N.Y. wineries’ economic growth, and provide Canadian wineries with a huge tax advantage. Elimination of anticompetitive wine tax practices should be a U.S. priority, and I respectfully request that USTR commit to begin formal negotiations on this issue at Canada’s first TPP negotiating session. In a separate letter, I have asked the Ambassador of Canada to the United States, Gary Doer, to make the same commitment.
While I welcome the inclusion of Canada in the TPP talks, I expect the United States and Canada ultimately to come to a formal agreement to eliminate barriers to equitable cross-border commerce in wine before TPP negotiations wrap up. New York wineries must have the opportunity to compete on equal footing with their Canadian competitors.
Dear Ambassador Doer,
I write today to follow up on a discussion we had on April 17, 2012, concerning restrictive Canadian wine taxation policies that put New York wineries at a competitive disadvantage. As you know, wine purchased by Canadian residents returning from day or weekend travel to the United States is subject to a series of federal and provincial taxes and fees that can amount to anywhere from 50 to 150 percent of the value of the wine. In contrast, U.S. residents returning from a visit to Canada are permitted to bring two bottles of wine duty free into the United States. I propose the United States and Canada formally begin talks to eliminate Canada’s high wine taxation barriers.
At our April meeting, you suggested the United States and Canada could negotiate resolution of the wine tax disparity in the context of the Trans-Pacific Partnership talks. I have asked the Office of the U.S. Trade Representative to take Canada up on that offer.
The TPP negotiations present a unique opportunity for the United States and Canada to come to an agreement to terminate provincial wine taxation practices that undermine economic growth along the border and hinder cross-border tourism and commerce. To that end, I respectfully request the Government of Canada commit to begin formal negotiations on this issue at Canada’s first TPP negotiating session. While I welcome the inclusion of Canada in the TPP talks, my expectation is that the United States and Canada ultimately come to a formal agreement to eliminate barriers to equitable cross-border commerce in wine before TPP negotiations wrap up.
Mr. Ambassador, I know you share my desire to continue to grow cross-border commerce between our two countries. Eliminating the wine tax disparity between New York and the neighboring provinces of Ontario and Quebec is a critical step in the right direction.
Thank you for your attention to this matter. I look forward to continuing to work with you on this and other issues involving New York-Canada economic ties.