Release: Appeal Panel public hearing over Alberta government’s ‘tax and refund’ policy for beer today

Release: Appeal Panel public hearing over Alberta government’s ‘tax and refund’ policy for beer today

Calgary – On January 25, 2018, Calgary-based, Artisan Ales, is appearing in Montreal before an appellate panel assembled under the Agreement on Internal Trade (“AIT”) in its ongoing challenge to the Alberta government’s discriminatory treatment of out-of-province craft beer. You can read Artisan Ales’s appeal factum here.

Today’s hearing concerns Alberta’s appeal of a decision from July 28, 2017 in which a panel of experts found that the province’s tax-and-rebate regime violated the AIT. In their July 28, 2017 report, a majority of the panel wrote that Alberta’s policies act as an impediment to trade within Canada because they discriminate against out-of-province beer, like those imported by Artisan Ales.

Background

Prior to October 28, 2015, Alberta imposed a common graduated mark-up on the beer of all small brewers, without regard to the brewer’s location within Canada.

Then, on October 28, 2015, Alberta raised the mark-up on the beer of small brewers located outside of British Columbia, Alberta, and Saskatchewan to $1.25 per litre. The reason the Government gave was that they wanted to protect the local brewing industry by shielding it from competition from the rest of Canada. This policy violated the Canadian Constitution’s so-called “free trade” clause and long-established case law from the Supreme Court of Canada that no province is permitted to erect a tariff barrier—a fee assessed by weight, volume, or a percentage of value—with the purpose of inhibiting interprovincial trade.

After the Canadian Constitution Foundation informed the government that this policy was unconstitutional, and Ontario brewer Steam Whistle sought and received injunctive relieve from the Alberta Court of Queen’s Bench, the province devised second policy to achieve its anti-trade objectives.

On August 5, 2016, Alberta began applying a mark-up of $1.25 per litre to all beer while paying Alberta small breweries a new subsidy on the sale of their beer in Alberta. The two elements of the August 2016 policy put small Alberta brewers in the same advantageous economic position vis-à-vis out-of-province small brewers that the October 2015 policy had done.

Measure

AB beer (if sold in AB)

Beer from SK & BC

All other CDN beer

Prior to 2015

$0.20 per litre

$0.20 per litre

$0.20 per litre

2015 policy

$0.20 per litre

$0.20 per litre

$1.25 per litre

2016 policy

$1.25 per litre & offsetting grant of $1.05 per litre.

Net: $0.20 per litre.

$1.25 per litre

$1.25 per litre

Just like the first policy, the intent of the second was to shield the Alberta craft brewing industry from competition by inflating the cost of selling beer brewed elsewhere in Canada. But far from promoting local jobs and business, which was the Government’s justification, these policies have had the opposite effect.

Artisan Ales is small business located in Calgary that imports craft beer into Alberta, Saskatchewan and Manitoba. The majority of Artisan Ales’s sales in Alberta are of beers produced in Quebec. Since November 2015, Artisan Ales has seen nearly a 40 per cent decline in sales as a result of Alberta’s discriminatory policies.

The Agreement on Internal Trade

In April 2015, Artisan Ales initiated a complaint under the AIT against the Government of Alberta.

The AIT is a free-trade agreement which was signed by all Canadian provinces and the federal government in 1994. Under this agreement, Alberta is committed to “reciprocal non-discrimination”—meaning that the province must treat beer produced in any other province no less favourably than how it treats beer produced within Alberta. Although the AIT was superseded earlier this year by the Canadian Free Trade Agreement, the governing principles remain broadly the same and Artisan Ales’s complaint was grandfathered in from the earlier agreement.

Mike Tessier, owner of Artisan Ales, said:
“The facts in my case are clear—the Government of Alberta is discriminating against and harming my business. Our case was heard last summer and Alberta was found to be violating its trade obligations. The panel gave the province six months to fix its unfair policies, but instead of complying, Alberta has dragged this process out as long as it could. Over two years have passed since Alberta brought in these harmful and discriminatory policies. The damage done to my business is probably irreparable. I am looking forward to having this appellate panel consider our case.”
Derek From, Staff Lawyer for the CCF, said:
“The AIT reflects the same sort of free-trade principles that are enshrined in our constitution. Under the AIT, Alberta is committed to “reciprocal non-discrimination”—meaning that the province must treat beer produced in any other province no less favourably than it treats beer produced within the province. While I am disappointed that Alberta has decided to appeal this decision and perpetuate the harm being done to Alberta’s craft beer market, I remain confident that the appellate panel will decide in Artisan Ale’s favour.”
The Canadian Constitution Foundation (“Freedom’s Defence Team”) is a registered charity, independent and non-partisan, whose mission is to defend the constitutional freedoms of Canadians through education, communication and litigation.