What motivated Finance Minister Joe Ceci to impose a discriminatory tax on out-of-province beer back in October 2015? Was it to diversify the Alberta economy while leveling the playing field for the local brewing industry, as he later claimed?
Internal government documents filed with the court in connection with Steam Whistle and Great Western Brewing’s upcoming trial over the tax reveal a very different story. The tax, which has resulted in three separate legal proceedings to date, began with Ceci’s instruction to his officials to “obtain an additional $85 million in revenue from liquor mark-ups.”
So it was always about soaking beer drinkers for more money. All the protectionist talk about helping Alberta brewers was a diversionary tactic.
In the same 2015 ministerial briefing note, public servants advised Ceci that holding off on the discriminatory tax increase would provide “time to develop a plan to support small brewers while avoiding the introduction of further mark-up changes.”
Ceci ignored this advice and plowed ahead anyway. Under his watch, beer mark-ups have soared. The mark-up on a popular summer beer like Dieu du Ciel’s Rosée d’Hibiscus from Quebec increased from $1.64 a case to $10.23. For the most part, this increase has been passed on to beer drinkers.
Other documents reveal that public servants also warned Ceci in June 2016 not to push for the equal treatment of Alberta small brewers in the BC market in order to protect “the trade relationship between these two provinces, given Alberta’s interest in gaining access to the ocean for exports.”
Unfortunately, this time Ceci took their advice, and the interests of Alberta’s small brewers were thrown under the bus for so-called “social licence.” So much for his declared interest in leveling the playing field.
These decisions have had a devastating impact on consumers and Alberta businesses. On June 1, Artisan Ales, a small Calgary-owned business that imports award-winning beers from Quebec, told an expert panel that Alberta is violating the pan-Canadian Agreement on Internal Trade (AIT), which requires the province to treat beer from elsewhere in Canada no less favourably than it treats locally brewed beer, and prohibits obstacles to interprovincial trade. The panel is expected to issue a compliance decision by mid-July.
Clearly, Alberta’s beer policies are impairing free trade within Canada. Artisan Ales has seen an 86 per cent decrease in profits since October 2015. Similarly, Bottlescrew Bill’s, a Calgary pub that boasts one of the widest selection of beers in the city, has experienced a decrease of 14.5 per cent in sales of beers from outside of Alberta, and has had to remove several Ontario, Maritime and British Columbia beers from its list.
Data from Connect Logistics, the distributor of almost all the craft beer available in Alberta, shows that sales of beer originating from outside of Alberta fell by 55.5 per cent between October 2015 and 2016. Over this same period, Beer Canada’s data indicates an overall decline of only 3 per cent in the Alberta market, so these sharp declines cannot be explained away by reference to a depressed local economy.
Remember that perfect patio beer, Rosée d’Hibiscus? A six pack now retails for $23.29, up from around $18 just two years ago. Beyond unnecessary litigation and reduced selection for Albertans, higher prices for some of Canada’s best beers will be Ceci’s lasting impact on Alberta’s beer market.
But don’t be fooled. You’re not paying more because Edmonton wants to diversify the economy or support local brewers. That’s just political cover. The record shows it’s really because they want to squeeze you for more of your hard-earned dollars and they don’t care if they have to ignore the constitution or the AIT to do it.
(Image by dailymatador under CC 2.0).
