Canadian Taxpayers Federation
With the holiday season underway, many Canadians will be taking the time to enjoy a few drinks, whether at office parties, with friends or at home with their families.
It won’t be cheap. The sobering fact is most Canadians aren’t even aware that the taxman makes a killing every time they raise a glass. It varies depending on the province, but on average taxes account for around 80 per cent of the price of spirits, 65 to 70 per cent for wine and just under 50 per cent for beer.
Thankfully there is cause to raise a glass this week as two separate fights are underway to help make the cost of a drink a little less steep.
The first comes in the form of an appeal taking place at the Supreme Court of Canada, where justices are hearing arguments in the case of Gerard Comeau, who was arrested in 2012 after buying 15 cases of beer in Quebec and transporting them across the Registouche River into New Brunswick.
He received a fine for violating a New Brunswick law that limits the amount of alcohol a person can bring into the province from elsewhere in Canada.
Backed by the Canadian Constitution Foundation, Comeau fought the ticket and argued that section 121 of the Constitution – which says that goods must be “admitted free” between provinces – renders New Brunswick’s restriction unconstitutional.
The judge agreed, and acquitted Comeau, so the government of New Brunswick appealed to the Supreme Court of Canada.
Why does this matter for the price of alcohol? In a word, competition: if Canadians are prevented from taking alcohol across provincial boundaries, provincial governments have a captive audience and can raise taxes without much fear of losing revenue.
But if the Supreme Court finds that Canadians are indeed permitted to transport alcohol between provinces, it will mean greater competition, forcing provinces to make sure their alcohol taxes are competitive with neighbouring provinces.
The second fight involves a campaign launched by the Canadian Taxpayers Federation to help fight against the so-called “escalator tax” on alcohol introduced by the federal government as part of this year’s budget. The liquor tax escalator automatically hikes the taxes on beer, wine and spirits each year by the rate of inflation. And it could mean an extra $470 million poured out of Canadians’ pockets and into government coffers over the next five years.
The government has tried to frame this trick as taking the “politics” out of tax hikes, as if raising taxes was the natural order of the universe, rather than an inherently political decision made by politicians.
It’s a naked attempt to dodge the parliamentary responsibility to face the public to explain, year after year, why they’re raising taxes yet again. Why take the political heat on an annual basis when you can just stick the tax on a hidden “escalator” and let it do all the work for you?
Even more concerning is the precedent it sets. If they can get away with automatic tax hikes on alcohol, what’s next? Gas taxes? Income taxes? The GST?
The outcome of both of these fights will have broad, long-term implications that go far beyond the price of booze. But if they are successful, Canadians may want to order a (cheaper) drink to celebrate.