Canadian Taxpayers Federation
The sun is shining, farmers are seeding, and Albertans are enjoying their first rounds of patio beers. Meanwhile, the Alberta government is doubling down on its hangover-inducing beer tax-and-subsidy scheme by expanding similar policies to distillers. The government has hit every link of the beer supply chain with one cost increase or another. Both brewing beer and farming barley in Alberta are more expensive now, thanks to the government’s carbon tax.
Beer prices in your local liquor store are higher because of the government’s enormous, trade-unfriendly beer tax increases. Those taxes, along with so many others, went up last year, increasing “the price of some six-packs by about $3”.
Sorry to steal your sunshine. If you’re thinking, “Well, I’ll just switch to cocktails this summer,” bad news: the federal government brought in big excise tax hikes on spirits in their March budget.
And as if buzz kills were mandatory, the Alberta government is piling on to make matters worse. In the February budget, the Alberta government announced a new subsidy for distillers, based on the subsidy program for select brewers, announced last summer.
Successful court injunctions have been brought against the government of Alberta in response to its beer tax hikes and subsidies, as some have argued they violate principles of free interprovincial trade. On top of increased beer prices punishing thirsty Albertans, the policy has risked decreased beer sales (bad news for retailers and government tax revenue) and a brewing interprovincial trade war hurting brewers, farmers and consumers.
Why is the Alberta government continuing to pick winners and losers by giving financial advantages to some businesses but not others in the same sector? It’s corporate welfare, plain and simple. The Alberta government has already wasted billions on economic diversification attempts. That’s not a great track record.
This perverse policy was recently captured with great irony. Alberta’s Minister of Finance boldly and publicly said Alberta would “keep being successful now with the distillers program” after Calgary-based Alberta Distillers Ltd. (which exports to 30 countries) won the award as Canada’s Distillery of the Year at the Canadian Whisky Awards only weeks earlier. With well-earned success, Alberta businesses are quite capable of standing on their own.
Governments across Canada have introduced similar preferential policies for beer, wine, and spirits – and it’s a mess. Millions of scarce public dollars have been spent for little or no return, enriching some companies at taxpayers’ expense. By doing this, governments have actively discouraged other businesses from committing greater investments. Why would someone invest when it means they’d be competing with governments, their regulations, and their vast taxpayer-funded resources?
These policies fail to recognize the investments already made by brewers and distillers, including scores of good, full-time jobs for Albertans, annual exports of beer and spirits sales of over $100 million, and the purchase of tens of thousands of tonnes of Alberta-grown grain.
Distillers in the province are already the single largest buyer of rye in Canada, which overwhelmingly comes from Alberta farmers. And both brewers and distillers across western Canada buy large volumes of many prairie-grown grains like wheat and barley, using it to make beer, whisky and other spirits.
Alberta farmers, brewers and distillers already are innovative and entrepreneurial. Now they’re being pushed backwards, and could have access to fewer markets if trade wars break out.
While raising countless taxes, it’s clear Alberta’s NDP government wants to take some sort of faux credit for helping the economy. But the provincial beer and spirits tax and subsidy policies are not in the best interests of consumers, farmers, entrepreneurs – or even government coffers.
Alberta’s beer and liquor industries don’t need magic tricks to succeed. The traditional Alberta Advantage of low taxes and lessened regulations showed benefits all around.
The government should abandon its heavy-handed approach and make way for fewer trade barriers and lower patio drink prices. We can all raise a glass to that.
– Paige MacPherson, CTF Alberta Director and Robin Speer, Western Canadian Wheat Growers Executive Director.