Thank you very much, Mr. Chair.

Mr. Chair and members of the committee, thank you for your time and attention today.

My name is Vincent Lambert and I am the general secretary of the Union québécoise des microdistilleries, or UQMD. I also serve as the Quebec representative on the board of the Canadian Craft Distillers Alliance, or CCDA, which represents more than 300 Canadian distilleries. Joining me today is Nicolas Bériault, a member of the UQMD board of directors and co-founder of Distillerie 3 Lacs, located in Salaberry-de-Valleyfield.

The 50 members of UQMD generate over $100 million in spirits sales annually. Our mission is to support the development of the microdistillery industry, to promote the production of local spirits, and to promote them here and abroad.

Since our meeting last May, when I had the opportunity to present our excise duty reform proposal for Canadian spirits, it has been supported by the Canadian Craft Distillers Alliance, which is an association of Canada's provincial craft distillers associations. This pan-Canadian support is a testament to the unity of our sector around this much-needed reform. As the director of the CCDA for Quebec, I am also presenting this national mandate in speaking to you today.

Over the past few years, there has been a real interest in Canadian craft distilleries, which is very similar to the rise of microbreweries in the country. Despite this growth, our distilleries are facing increased competition, especially from the United States, which makes it more crucial than ever to update our taxation model.

In stark contrast, Canadian distilleries are subject to an excise duty of $13.57 per litre of absolute alcohol, compared to only $0.98 in the United States. A Canadian bottle of spirits is therefore subject to approximately $4 in excise duty, compared to $0.29 per American bottle. This difference undermines the competitiveness of our spirits in the marketplace and makes it extremely difficult for our distilleries to expand and compete on a level playing field.

If we take the example of Quebec, taxes and markups account for about 75% of the price of a bottle. For example, for a bottle sold for $40 to the consumer, barely $10 goes back to the distillery. This greatly limits our industry's ability to invest in its growth and to contribute as much as it can to local economies.

Starting in 2018, the United States introduced excise duty reductions for small and medium-sized spirits producers. This has allowed the sector to grow rapidly and generate significant economic benefits. This strategy has created over 1,000 distilleries, tens of thousands of jobs and hundreds of millions of dollars in local economic benefits in every region of the United States. Drawing on this model and that of our own brewing industry in Canada, we propose a progressive taxation system based on production volumes that is designed to ease the tax burden on small and medium-sized producers so that they can become the Canadian economic engines they are intended to be.

Many countries have demonstrated the effectiveness of similar tax policies in stimulating their domestic industries. By applying an excise duty reduction for the three production levels in the spirits sector, we can create an environment conducive to the growth of local distilleries, which will allow Canadian distillers to achieve a level of economic development comparable to economies with similar approaches. This model is consistent with the principles of the World Trade Organization, which encourages policies that promote economic development without impeding free trade.

In conclusion, this proposal goes far beyond simple tax modernization. It is a true economic lever for a dynamic, innovative and growing industry. Reducing excise duties based on production volumes will create a multiplier effect that will benefit many related sectors. This measure will not only support local businesses, but also stimulate regional value chains, which will create thousands of high-quality, well-paying jobs and generate millions of dollars in economic development for our communities in all regions of our great country.

I'll leave you with that thought. Every bottle of spirits produced in Canada represents approximately $20 in local economic development, including the value of the farm inputs used, distribution and associated tourism activities. If Canadians are consuming spirits, should we not find ways to ensure that those products are made here as much as possible, by businesses that are thriving? We could capture not only the tax revenue, but also that $20 per bottle, in addition to the thousands of jobs that could be generated in all regions of the country.

Thank you for your time. We are available to answer any questions you may have.