As the constitutional challenge to New Brunswick’s protectionist limits on interprovincial alcohol imports continues, it is becoming clear that, in the effort to protect free trade within Canada, we have to be on guard nationwide.
Alberta, long viewed as progressive in its alcohol regulations for at least allowing sales of beer and wine through private (non-government) stores, has now caught the protectionist bug; the province has brought in a new budget measure that imposes significantly heavier taxes on brewers from outside of Alberta, British Columbia and Saskatchewan, compared to their similarly-sized counterparts within.
The new tax set-up is great for craft brewers in the three chosen provinces, but it’s lousy for just about everyone else, including Alberta beer importers and Alberta consumers, who will see prices rise on all alcohol sold in the province, but dramatically so on craft beer that comes from outside the favoured provincial triumvirate.
As explained to the Calgary Herald by Vern Raincock, the Alberta account manager for Garrison Brewing based out of Halifax, the cost of buying a Garrison keg in Alberta has now gone up $33.07 in taxes.
Essentially, the government is justifying the change on the grounds that it will create new Alberta jobs through startup and growing craft breweries, which would be a reasonable enough goal if didn’t overlook the current Alberta jobs that the change could be killing — those of the many Alberta beer importers and Alberta suppliers who service brewing operations east of Saskatchewan. And that’s not even mentioning the hospitality (especially restaurant and pub) jobs that might be sacrificed due to the decrease in beer selection.
It is this shortsighted failure to appreciate the local wealth that free interprovincial trade provides which has afflicted New Brunswick. The government there insists that its stringent limits on bringing in alcohol from outside the province (no more than one bottle of wine or spirits; no more than 12 pints of beer) are economically essential. It seems not to have considered how much good open beer borders would do New Brunswick breweries, pubs, restaurants, and consumers — and the New Brunswick government which would reap the financial benefits of the economic growth.
The other thing these provinces seem not to have considered is the Canadian Constitution, which explicitly protects the free flow of goods from one province to another. Even the flawed prohibition-era Gold Seal Supreme Court case, which offers an illogically narrow interpretation of Section 121, recognizes that the provision at least prohibits interprovincial tariffs.
It is this which makes Alberta’s new budget measure legally problematic. Whatever honourable intentions the Alberta Liquor and Gaming Commission may have about encouraging economic growth at home, there is no way the differential tax treatment of brewers based on their province of origin should stand up in court.
Equally problematic in my mind, and in the mind of my colleague Derek James From, who has written about it in the Calgary Herald, is the idea that the Alberta government would be stepping in to choose which craft beers its citizens should be buying and enjoying.
Few craft beer enthusiasts make decisions about what they buy based exclusively on where the product was produced; they’re concerned about taste, packaging, quality, and a bunch of other factors that mean little to a non-beer-drinker like me. That should remain their choice to make; and if they are not choosing as many Alberta, British Columbia and Saskatchewan beers as the producers in those provinces would like, that is a sign that the producers may need to change their game, not that the government should change the rules.
Pundits and economists continue the fight against the fiction that protectionism is a wise economic choice. At the same time, lawyers like those of us at the Canadian Constitution Foundation and our pro bono partners Ian Blue and Arnold Schwisberg continue the legal fight against unconstitutional barriers to interprovincial trade. However much New Brunswick, Alberta and other provinces may want to privilege their own local businesses over others, the Constitution just won’t allow it. And this is to the benefit of all Canadians — especially those with a taste for craft beer.
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