Scotch Whisky Plant Receives Tax Exemption
Council approved a three year 100 percent property tax exemption for a new scotch whisky distillery but not before the proposal almost hit the rocks.
At Monday night’s regular Council meeting the issue was a proposed 100 percent tax free holiday for Imperial Distillery from January 1st of the year they become operational. The India based firm wants to invest $3 million in the facility through purchase and upgrades.
The project will create 15 jobs according to the report to Council. The firm has tentatively purchased 1021 and 1027 Ominica Street East - the former Dorlite Manufacturing facility.
Council was told that due to the nature of the business - producing and aging scotch whisky - that the company would have no revenues for three years due to the aging process.
Cost to the City would be $30,000 in lost tax revenue. The tax exemption has been requested by the Imperial Distilleries.
According to the report granting the tax exemption would hit five key factors for the city. They are
The firm is planning to invest $3 million in the Moose Jaw and already has significant operations in India. The corporate listing has the privately held company founded nine years ago and it is involved in the distilling and wine business.
The new company is planning to hire up to 15 people to work at the plant once it is fully operational.
The plant will create local economic spin-offs and help stimulate the local economy.
The plant will cause those working there to have higher incomes and allow them to spend more money in the local economy.
The employees will require housing and it will create property tax revenues for the City.
Mayor Frasier Tolmie said he supported the idea and the investors had initially looked at British Columbia for the plant but had moved eastward in their search before settling on Saskatchewan and chose Moose Jaw after looking at building the plant in Regina or Saskatoon first.
“This provides the opportunity for the City of Moose Jaw to build bridges with India and other parts of southeast Asia,” Mayor Tolmie said.
“It takes three years to age this type of whisky even though this is outside of our policy…their profits and revenue would not be right away.”
Councillor Scott McMann said he opposed the tax exemption request because the City already had a very generous tax exemption policy and the request goes against that policy.
“We are hoping they are going to invest the money, “ Councillor McMann, stated adding “I don’t think it makes sense it goes against our mandate.”
“I would like to see a scotch (whisky) generated in the city but it shouldn’t be on taxpayer dollars,” he said.
Councillor Brian Swanson stated his opposition to the proposal and he questioned the report to Council which he said “assumes new housing being built” by employees to offset the plant’s tax exemption.
“This gives a tax exemption for an existing building…we are taking a tax paying building and removing it for three years…its a very significant change for the City,” Councillor Swanson stated.
He went on to state by setting the precedent the City would be faced with requests from others seeking to invest locally in an existing building.
“How do we say no to the next one?” Councillor Swanson asked.
Because there is no offsetting cuts to City services he said it meant increased property taxes for all to make up for the shortfall. He also went on to state that during the tax exemption period the City would still be responsible for fire, police, waterline, sewer line and road repair costs for the facility during the tax exempt three years.
Councillor Swanson said there were other advantages Moose Jaw had over top of other centres and that was “you can buy a building for significantly less than you can in other places.”
He said the question had been raised what sort of tax exemption did the City of Regina give Minhas Distilling to setup in the Queen City and the answer was nothing. Minhas Distilling is not affiliated with the proposed Moose Jaw venture.
Mayor Tolmie however disagreed with the contention established businesses would not be in favour of the tax exemption but rather in his weekly visits with businesses it was the exact opposite.
“This is a significant way we do business tan before because we haven’t seen growth…when I go around and talk to business on a weekly schedule they want to see new businesses come to Moose Jaw,” he said, adding “other businesses in the city are willing to see these tax incentives to see growth.”
Councillor Heather Eby acknowledged the concerns of Councillors McMann and Swanson but was nevertheless was supporting the tax exemption.
“(The tax exemption) is not based on Imperial Distilleries are not going to make any profit in the first three years there are not going to be making any revenue,” Councillor Eby stated.
She spoke about 2011 when the City took a big risk on Thunder Creek Pork by waving taxes and providing incentives and it had paid off.
“It is a measure of risk but I think it is worth it,” she said.
Councillor Chris Warren echoed his support for the tax exemption.
“The proposal is unique and it does stand out. This is an opportunity for growth,” Councillor Warren stated.
Councillor Crystal Froese said it was an agricultural value added business and it was “approaching economic development in a different way.”
“The city has been in a rut for a long time…we haven’t seen growth...we haven’t seen an increase in population,” Council Froese said.
In a recorded vote the tax exemption as well as a review of the tax exemption policy for this type of project was approved. Voting in favour were Councillors Dawn Luhning, Froese, Warren, Eby and Mayor Tolmie with Councillors McMann and Swanson opposed.
Under the existing policy the City has a tax incentive policy which exempts taxes at a decreasing rate over five years with the creation of 15 jobs. Only the first year receives a 100 property tax holiday.