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Alcohol

More consumers reaching for alcohol-free beer, wines and spirits

Various studies over the past two years have shown that there was a worldwide increase in alcohol consumption during the pandemic because many people were worried and stressed as they self-isolated due to COVID-19.

But now, it appears there is a new trend happening as sales statistics show there has been an increase in the purchases of alcohol-free beer, wine and spirits.

“You can have non-alcoholic beers now that are so close to the real thing that you could probably fool someone in a taste test,” said Sarah Kate, an alcohol-free sommelier, who is also the founder of the website, Some Good Clean Fun.

Kate promotes an alcohol-free and healthy lifestyle and said a global survey by Bacardi Limited, the world’s largest privately held spirits company, found that 58 per cent of consumers are now drinking beverages that contain low or no alcohol for personal and mental health reasons.

Read the full article here

Canada is repealing the excise tax on non-alcoholic beer

Non-alcoholic beer has been subject to federal excise taxes despite not containing virtually any alcohol at all. 

Our North American Affairs Manager, David Clement pointed out several problems with this tax and was invited to meet with the Ministry of Finance to explain the arguments against the tax. For example, non-alcoholic wine and spirits are exempt from the tax, which created a huge disparity for non-alcoholic beer. Removing tax would reduce costs for health-conscious consumers, who are looking for a healthier alternative to their favorite drink. This would also be consistent with the principles of harm reduction, a policy approach the current government has taken upon other issues. 

Fortunately, Budget 2022 removes alcohol excise taxes on beer containing no more than 0.5% alcohol by volume. This is another great victory for Canadian consumers!

This is a step in the right direction and hopefully the start of a national discussion on modernizing the alcohol excise duty structure.

For more information, listen to this Consumer Choice Radio episode

L’UE PRÉPARE DE NOUVELLES RÈGLEMENTATIONS SUR L’ALCOOL

Voilà l’alcool de nouveau attaqué pour ses effets sur la santé. Cette fois-ci par une commission du Parlement européen, qui le lie à un grand nombre de cancers. Les propositions pour limiter les choix des consommateurs se multiplient en réponse…

Au sein de la « Commission pour battre le cancer » (BECA) du Parlement européen, des législateurs sont chargés de préparer des rapports qui seront intégrés dans le « Plan européen pour vaincre le cancer » de la Commission européenne. En substance, le but de l’Union Européenne (UE) est de lutter contre les maladies dites non transmissibles, c’est-à-dire les diagnostics de cancer qui auraient pu être évités grâce à un mode de vie plus sain.

Leur première cible ? L’alcool.

En effet, selon un premier rapport réalisé par la députée européenne Véronique Trillet-Lenoir (La République En Marche), l’alcool est responsable de 10% des cancers chez les hommes et de 3% chez les femmes. Ses conclusions et recommandations soutiennent donc les objectifs de la Commission visant à réduire la consommation d’alcool de 10% d’ici 2025.

S’attaquer à l’abus d’alcool ou à la simple consommation ?

Certaines des mesures proposées ont cependant été repoussées par le Parti populaire européen (PPE, centre-droit) au Parlement européen. La position du parti majoritaire est que l’UE ne devrait pas stigmatiser la consommation d’alcool en général, mais plutôt mettre l’accent sur l’abus d’alcool.

« Si la consommation excessive d’alcool est, bien sûr, un risque pour la santé, des mesures appropriées et proportionnées doivent être prises sans stigmatiser ce secteur économique important qui fait partie de notre mode de vie », a ainsi expliqué Nathalie Colin-Oesterlé, eurodéputée PPE (Les Centristes) et vice-présidente de la commission BECA.

L’une des mesures proposées par le Parlement européen consiste à apposer des étiquettes d’avertissement sur les bouteilles de vin, qui avaient jusqu’à présent été épargnées par les étiquettes semblables à celles des paquets de cigarettes.

Cela pourrait bientôt changer, car les législateurs discutent déjà du libellé de l’étiquette, et non pas de la simple nécessité d’une étiquette d’avertissement en soi. L’étiquette dira-t-elle « toute consommation d’alcool peut entraîner un cancer » ou « l’abus d’alcool peut entraîner un cancer » ? Sera-t-elle illustrée par une photo de foie endommagé ? Peu importe, l’ancienne tradition des étiquettes de vin sera alors mutilée.

En 2023, la Commission européenne présentera également des propositions visant à réduire l’accessibilité financière et la disponibilité de l’alcool, ce qui signifie que les taxes sur la bière et les spiritueux seront probablement beaucoup plus élevées.

En outre, l’UE présentera des propositions visant à interdire la publicité pour l’alcool lors des manifestations sportives. Cette proposition a ensuite été édulcorée pour devenir « le parrainage d’événements sportifs destinés aux mineurs ». Une expression très vague… Tous les sports qui attirent les mineurs (lesquels ne le font pas ?) pourraient entrer dans cette catégorie.

En particulier, les sports qui dépendent fortement des parrainages, comme le football, pourraient être durement touchés par une telle interdiction. Les parlementaires bruxellois de gauche et les écologistes se sont opposés à toute modification des propositions existantes, arguant qu’il n’existe pas de consommation d’alcool sans danger.

Un prix unique… et plus élevé

Une suggestion susceptible d’être introduite au niveau de l’Union européenne, notamment parce qu’elle existe déjà dans des endroits comme l’Écosse et l’Irlande, est celle d’un prix minimum de l’alcool. En substance, ce modèle fixe un prix minimum par unité d’alcool et augmente les prix d’alcool en général.

Le fait que même les autorités sanitaires du gouvernement écossais, après avoir analysé la mesure, ont constaté qu’elle n’avait aucun effet sur les décès ou les maladies liés à l’alcool, n’impressionnera probablement personne à Bruxelles. L’agence Public Health Scotland indique également dans sa conclusion que les crimes non liés à l’alcool sont soupçonnés d’avoir été affectés par le prix minimum de l’alcool, car les gangs profitent de la baisse du prix de l’alcool pour vendre des boissons illicites.

En fait, permettez-moi de faire une prédiction audacieuse : non seulement l’Union européenne introduira un prix minimum pour l’alcool, mais elle l’augmentera aussi progressivement au fil du temps. Pourquoi ? Chaque fois qu’une étude montrera que la mesure ne fonctionne pas, un bureaucrate malin à Bruxelles conclura que le problème n’était pas l’inefficacité de la mesure, mais que les prix n’étaient tout simplement pas assez élevés.

En plus de la réglementation sur l’alcool qu’elle devrait dévoiler l’année prochaine, l’UE va publier des objectifs contraignants pour la réduction globale de la consommation d’alcool. Cela signifie que les États membres devront trouver des mesures supplémentaires pour réduire la consommation d’alcool, sous peine de se voir reprocher par la Commission européenne de ne pas en faire assez.

La France a été la reine des mauvaises idées à cet égard. Il pourrait s’agir d’interdire les happy hours, de restreindre les heures d’ouverture des bars, de relever l’âge limite de vente d’alcool, voire de créer des magasins vendant de l’alcool appartenant à l’Etat et contrôlés par lui, comme il en existe déjà en Europe du Nord.

Toutes ces mesures vont exciter les criminels de type Al Capone. Ce que nous faisons actuellement en Europe, c’est créer une quasi-prohibition de l’alcool, où les personnes à faibles revenus ne pourront plus acquérir de l’alcool légalement. Par conséquent, ils pourraient passer au système D et fabriquer leurs propres boissons alcoolisées, ou les obtenir par toutes sortes de moyens illégaux, avec tous les effets secondaires que cela peut entraîner.

Il semble que nous soyons condamnés à répéter les erreurs du passé en matière de réglementation du mode de vie. C’est si déprimant que… cela donnerait envie de boire.

Originally published here

Should dealcoholized beer be taxed the same as regular beer?

Beer is one of those products that gets heavily taxed however should that mean the tax should be equal between alcoholic and dealcoholized beer?

Listen to the interview here

Steuerwettbewerb und Verbraucherschutz

Staaten stehen in einer gewissen Konkurrenz zueinander. Zwar ist der Handel kein Nullsummenspiel und Handelskriege, Zöller und andere Beschränkungen daher kontraproduktiv. Dennoch lässt sich nicht leugnen, dass verschiedene Regulierungsmöglichkeiten zu besseren, oder schlechteren Ergebnissen führen. So ist derjenige Staat, der seinen Bürgern und Unternehmen weniger Steuern aufbürdet tendenziell wettbewerbsfähiger, als ein Staat mit hoher Besteuerung. Ein Staat, der das Eröffnen eines Unternehmens erleichtert, wird meistens auch mehr Selbständige haben, als ein Staat, der eine hohe bürokratische Barriere aufstellt. Nur in einer völlig freien globalen Marktwirtschaft würden diese regulatorischen Unterschiede verschwinden.
Diese Ausgangslage haben wir aber nicht. Die Beatles haben sich aufgelöst. Sebastian Vettel wird nicht mit Ferrari Weltmeister und Eltern lieben manchmal nicht alle ihre Kinder gleich stark. 


In dieser von Fehlern behafteten Welt stehen die Staaten durchaus im gegenseitigen Wettbewerb. Das führt zu solchen pathologischen Erscheinungen, wie Protektionismus.

Eine andere Art des Wettbewerbs konnte man vor nicht zu langer Zeit in zwei baltischen Staaten beobachten. So bemerkte man in Estland, dass durch die höheren Alkoholsteuern viele Bürger sich dazu entschieden Alkohol nicht im eigenen Land, sondern bei dem Nachbarn in Lettland zu kaufen. Dadurch entwickelte sich vor Allem in den Grenzgebieten reger Handel, Geschäfte wuchsen wie Waldpilze nach einem Schauer. Die dadurch von dem estnischen Staatshaushalt erlittenen Verluste brachten wie so häufig Wirkung und die Regierung entschied sich die Alkoholsteuern 2019 um 25% zu senken.

Das löste zunächst eine kleine diplomatische Krise aus. So zeigten sich die Letten zunächst bestürzt. Die beiden Staaten hatten sich eigentlich Jahre zuvor darauf geeinigt, dass Lettland die Alkoholsteuern erhöhen werde, was auch schrittweise geschah. Der Premierminister Lettlands beteuerte zunächst, dass er in keinen Alkoholkrieg gegen Estland ziehen wolle. Die mutige Handlung der Estländer zwang Lettland effektiv dazu seine Alkoholsteuern im Gegenzug zu senken. Das Ergebnis war eine Absenkung der Alkoholsteuern um 15%.

Dabei muss eine solche Steuersenkung nicht dazu führen, dass weniger eingenommen wird. 
Polen entschied sich 2002 dazu die Alkoholsteuern radikal um 30% zu senken, um die “grauen Zonen”  zu bekämpfen, in denen illegal und unkontrolliert Alkohol hergestellt wurde. Wegen der Steuersenkung verzeichnete der polnische Staatshaushalt erhebliche Einnahmen, und konnte eine seit Jahren anhaltende Tendenz umkehren. 2002 brachten die Steuern noch 3,87 Mld PLN (881 Mln €) ein, 2003 waren es bereits 4,09 Mld PLN (931 Mln €) und 2004 erfreute sich der polnische Staat über 4,56 Mld PLN (1 Mld €) . Ebenso konnten die Grauzonen bekämpft werden, in denen Alkohol unkontrolliert hergestellt wurde.
Leider lernte Polen nicht aus dieser positiven Erfahrung. Erst gestern, am 02.12.21 entschied der polnische Sejm über eine Erhöhung der Alkoholsteuern und Tabaksteuern. Man argumentierte mit der Sorge um die Volksgesundheit… Die gleiche Regierung führte eine Steuer für E-Zigarettenliquids ein, einer weniger schädlichen Alternative, die eine Preiserhöhung von mehreren Hundert Prozent bewirkte. Volksgesundheit also…

Die Beispiele zeigen zwei Lehren. Einerseits ist eine Steuersenkung nicht immer gleichbedeutend mit einem Verlust der finanziellen Mittel für den Staat. Andererseits ist sie ein geeignetes Werkzeug des internationalen Wettbewerbs, mit finanziellen und gesundheitlichen Vorteilen für den Verbraucher.

Damit ein solcher Wettbewerb entstehen kann, braucht es bestimmte Rahmenbedingungen. Im Falle von Steuern die auf bestimmte Güter erhoben werden ist diese Rahmenbedingung der freie Markt und Freizügigkeit. Beide Staaten sind Mitglieder der europäischen Union. Die oben beschriebene Situation konnte nur entstehen, weil es für die Esten möglich ist ohne größeren bürokratischen und finanziellen Aufwand nach Lettland zu reisen und dort Waren einzukaufen.


Das Prinzip ist aber auf viele Arten von Steuern anwendbar. So können Staaten und Regionen auch gegeneinander konkurrieren indem sie Lohn- und Einkommensteuern, Kapitalmarktsteuern, Grundsteuern und andere Abgaben kürzen. Dieses Prinzip sieht man auf dem europäischen Kontinent in dem Beispiel des schweizer Föderalismus. Dort konkurrieren Kantone gegeneinander u.a. mit der Steuerlast. So zahlt man in dem im Zentrum des Landes gelegenen Kanton Zug tendenziell weniger Steuern als in den westlichen Gebieten in unmittelbarer Nähe zu Frankreich.

Ein größeres Land mit einer föderalen Struktur die Steuerwettbewerb begünstigt sind die USA. So erheben gleich neun Staaten in den USA (Wyoming, Washington, Texas, Tennessee, South Dakota, New Hampshire, Nevada, Florida, Alaska) keine eigenen Einkommensteuern. Das ist ein nicht unerheblicher Unterschied zu dem Bundesstaat Kalifornien, das eine Steuer von 13,3% erhebt. Unterschiede ergeben sich auch in Details, wie der Progression. So erheben Staaten wie Illinois, North Carolina, oder Minnesota zwar durchaus Einkommensteuern, diese allerdings in Form einer “flat tax”, einer Liniensteuer.
Große Unterschiede gibt es auch bei Verkaufssteuern (sales tax) und anderen Abgaben.

Sowohl in den USA als auch in der Schweiz haben die Bürger somit die Wahl zwischen verschiedenen Modellen von Besteuerung und können mit ihrem Einkommen und den eigenen Füßen abstimmen, indem sie einen anderen Wohnort wählen.

Diesen Mechanismus kann man auch in der EU beobachten. Einen solchen Vorteil des europäischen Föderalismus gilt es zu wahren und zu verstärken. Anstatt Mindeststeuersätze einzuführen (die Beispielsweise bereits bei der Mehrwertsteuer gelten) sollte die Europäische Union den Wettbewerb vielmehr gutheißen. Vorteile würden sich nicht nur für den individuellen Steuerzahler in der EU ergeben, sondern für die gesamte Freihandelszone. 
Eine niedrigere Besteuerung, die durch den Wettbewerb erreicht werden könnte, würde die europäischen Unternehmen konkurrenzfähiger auf dem internationalen Markt machen. Die EU sollte im Zusammenhang von Steuern also weniger von Solidarität und mehr von Föderalismus und Dezentralisierung sprechen.

Ottawa should kill its tax on booze-free beer

Before the pandemic, while at a Blue Jays game, my head turned when a patron at the bar ordered a non-alcoholic beer. At first, I thought this might just be a new hipster fad, but I couldn’t have been more wrong. Non-alcoholic beer isn’t only for designated drivers or pregnant women anymore. It is a continuously growing market with forecast worldwide sales over $4 billion (U.S.) by 2025. While I may not be the target audience for these new beverages, other Canadians clearly are.

This is where federal tax policy comes into play, because, oddly enough, non-alcoholized beer is subject to federal excise taxes, albeit less than what is paid on regular beer. Despite containing virtually no alcohol at all and therefore posing no real risk to consumers other than caloric intake, non-alcoholic beer is charged an excise tax of $2.82/hectolitre — a hectolitre being 100 litres. The application of an excise tax is a problem for several reasons.

The first problem with the excise tax for non-alcoholic beer is that non-alcoholic wine and spirits are exempt from the tax. For some reason, the federal government doesn’t treat all non-alcoholic beverages equally. Removing the excise tax for non-alcoholic beer would simply apply the government’s own logic consistently across the entire non-alcoholic sector.

Beyond consistency, removing the tax on beer would help reduce costs for health-conscious consumers, giving them better access to reduced-risk products. It would also very likely help expand the domestic production of these beverages, given that Canada is unique in its excise treatment of non-alcoholic beer. 

The tax also puts Ottawa offside with the provinces, which, as regulators of where alcohol products are sold within their boundaries, have already recognized that there is no justification for treating non-alcoholic products as strictly as standard beverage alcohol. That is why, from coast to coast, you can buy these products outside of each province’s alcohol retail system at grocery and convenience stores, often alongside carbonated water and pop. 

Finally, exempting non-alcoholic beer from the federal excise tax would be consistent with the principles of harm reduction, a policy approach the Trudeau government has championed, albeit selectively. When regulating and taxing products that could present some risk to consumers, it is important that legislators evaluate what that risk actually is. For non-alcoholic beer it is near zero, which is why it is not appropriate for the government to treat it the same as beer. Apart from residual puritanism, the main justification for taxes on beverage alcohol is to help cover any alcohol-related health-care costs that might arise. But what is the alcohol-related health-care burden of non-alcoholic beer? There isn’t any, which is why it should be exempt.

At the end of the day, Canada’s beer drinkers already pay enough in taxes — fully $676 million in excise taxes alone in 2020. And because it is indexed to inflation the alcohol excise increases every year without review, which is one reason, in addition to provincial markups, why on average 47 per cent of the price you pay for beer goes to the government. That is an exorbitant amount that should be reduced significantly.

Removing the excise tax for non-alcoholic beer would be a small first step in re-thinking what the appropriate level of tax is in Canada. It would give consumers more health-conscious choices, at better prices, and do so in a way is consistent with the government’s own logic for non-alcoholic beverages.

Originally published here

No reason to toast federal tax on non-alcoholic beer

Across the board, we should expect better from Ottawa, and the tax on non-alcoholic beer is yet another example of where they’ve gotten it wrong.

Sin-taxes, across all sectors, are fairly excessive in Canada. At almost every turn the government sinks its tax teeth into the process of you purchasing the products you like. This is true for cannabis products, alcohol, tobacco, vaping, gas, and annoyingly so, non-alcoholic beer. Yes, non-alcoholic beer in Canada is not exempt from federal excise taxes.

You read that right. The federal government also extends its sin-tax regime for non-alcoholic beer, at a rate of $2.82/hectolitre.

The application of excise taxes for non-alcoholic beer is problematic for a variety of reasons. The first, and most glaring, is that it is hypocritical given that the federal government has exempted non-alcoholic wine and spirits from the excise tax. Why apply it for beer, but not wine and spirits? Obviously, a more consistent approach would be to simply exempt all non-alcoholic beverages from the excise tax, because the purpose of the sin tax is to recover alcohol-related healthcare costs. That said, there are no alcohol-related healthcare costs at all from non-alcoholic beer, which immediately shows the lunacy of sin-taxing these products.

In addition to correcting hypocrisy, removing the excise tax for non-alcoholic beer would put federal policy in line with how the provinces treat these products. Provincial regulators, including Alberta, don’t require non-alcoholic beverages to be sold at licensed alcohol retail outlets, because they’ve accepted the obvious that these products don’t have alcohol in them and thus shouldn’t be strictly regulated. That is why in Alberta these products are often sold alongside carbonated water and pop. Removing the excise tax would be the federal government following the lead of the provinces in treating non-alcoholic beer differently than beer, because they are in fact different.

On the industry side, the federal excise tax acts as a barrier for product development in Canada, mostly because other beer producing jurisdictions (US,EU,UK) don’t tax non-alcoholic beer. Because of this the domestic industry in those jurisdictions has flourished, offering consumers more choice and at better prices. Their sane tax policy, coupled with increased consumer demand, is in large part why the non-alcoholic beer market is expected to grow to over $4 billion by 2025. These drinks aren’t just for hipsters, designated drivers and pregnant women anymore.

Lastly, and most importantly, is how non-alcoholic beer is yet another example of new products reducing harm for consumers. And while I don’t personally enjoy these drinks, I can see why someone would still want to enjoy a beer with their friends, or at a bar, without the alcohol that comes along with it.

From a harm reduction perspective, it makes perfect sense to have different tax strategies for products that vary in risk. The Trudeau government, at times, has championed harm reduction for illegal drugs but appears to have a blind spot when it comes to legal substances. This is an uncomfortable trend from Ottawa that is perfectly exemplified by the excise tax on non-alcoholic beer. Ottawa has kept the excise tax system for non-smokable THC cannabis products, like edibles and beverages, despite the fact they are significantly less harmful. They’ve sought to ban vape flavours, despite the fact that vaping is 95% less harmful than smoking, and flavours are an incredibly useful tool for adult smokers trying to quit.

Across the board, we should expect better from Ottawa, and the tax on non-alcoholic beer is yet another example of where they’ve gotten it wrong. Hopefully, come Budget 2022, they can correct this mistake and remove the excise tax from these products entirely.

Originally published here

Ending liquor monopoly in Ontario would be win-win-win

Rethinking the LCBO could save taxpayers a tremendous amount of money

Ontario is teetering on the edge of a fiscal cliff. Under its previous Liberal government, the province became the most indebted sub-sovereign unit in the world. Unfortunately, poor policy-making and the COVID-19 pandemic have only worsened its situation. Ontario’s debt is now over $404 billion, which means each Ontarian’s share of that debt is a whopping $27,000.

As the pandemic ends, Ontario will need bold policy-making to dig itself out of the hole it’s in. One bold policy that would help is privatizing the LCBO (Liquor Control Board of Ontario), or at a minimum capping its expansion and ending its monopoly status.

Scrapping the LCBO and shifting to a private, preferably uncapped, retail model would benefit consumers by offering them more choice and convenience. Ontario currently has the worst alcohol retail density in Canada, mostly because the combination of a government monopoly (LCBO), with a government-sanctioned private monopoly (The Beer Store) has limited the scalability of retail access. As a result, Ontario has only one alcohol retail outlet for every 4,480 residents. In comparison, British Columbia has one store for every 2,741 residents, Alberta one for every 1,897 residents, and Quebec one store for every 1,047 residents. Ending the LCBO’s monopoly would help bring Ontario onto a par with other provinces.

More importantly, rethinking the LCBO could save taxpayers a tremendous amount of money. The LCBO’s operating costs are bloated. Based on its 2019 annual financial statement, the average sales, general and administrative (SG&A) cost per store is $1,515,000 per year. With 666 corporate stores, that is a considerable expense to taxpayers. Private alternatives, like high-inventory private retailers in Alberta, cost significantly less to operate. Based on Alcanna’s 2019 annual financial report, the average SG&A for a private outlet comparable to an LCBO, is just $676,000 per year. If we could snap our fingers right now and fully transition the LCBO out of the government’s operating model, taxpayers would save an astounding $559 million per year. If the Ford government is looking for low-hanging fiscal fruit, this is it.

Labour unions and other supporters of nationalized alcohol distribution would obviously have an issue with the complete elimination of the LCBO. They will argue that privatization would threaten the well-paying jobs of the thousands of Ontarians who work for the LCBO. This could be true, as it’s unlikely that private retailers would require their workers to be members of OPSEU, the Ontario Public Service Employees Union, which has negotiated wages well above the market rates for comparable jobs. That said, there is a compromise solution that both expands consumer choice, maintains those LCBO jobs, and saves taxpayers millions of dollars. It is to stop the LCBO from expanding its operations and let the private sector fill the void.

Each year, on average, the LCBO, makes a net addition of seven new stores in Ontario. If the province were to simply stop the LCBO’s expansion, and have the private sector fill the gap, taxpayers would cumulatively save $88 million after five years. At the 10-year mark that figure would be $323 million. And these savings are only the ongoing operational savings and don’t include the tens of millions of dollars the LCBO spends to acquire storefronts for expansion.

This compromise solution would allow the LCBO’s existing outlets to remain operational, while also allowing for more retail access and a hybrid model moving forward. On top of the cost savings, there might well be revenue gains. Hybrid and private retail models for alcohol sale (as in B.C. and Alberta) actually generate more alcohol tax revenue per capita, a further benefit for the public purse. Politically, this compromise solution is a no-brainer. Increasing access, fuelling private business opportunities, generating more revenue, and all the while maintaining current LCBO employment would be a win-win-win.

The Ford government has already laid the groundwork for such an approach. Buried in the licences and permits schedule in the 2019 budget, the province effectively cleared the way for a truly free and open alcohol market in Ontario. The bill states that “A person may apply to the Registrar for a licence to operate a retail alcohol store, operate as a wholesaler, or deliver alcohol.”

Ontario has opened the door for a consumer-friendly retail model for alcohol that would finally end the LCBO’s monopoly. Full privatization would be best but if that is too great a stretch politically, a free-entry compromise would still benefit all Ontarians. The government has created the possibility of such a change. For the sake of consumers and taxpayers, it should now follow through.

Originally published here.

Make it closing time for Ontario’s beer monopoly

The Beer Store is an institution built on a toxic mix of prohibition and cronyism

News broke this month that The Beer Store (TBS), Ontario’s monopoly beer-seller, is losing money and lots of it. According to its annual financial statement, TBS operated at a $50.7 million loss in 2020. While some of that can be chalked up to the pandemic decimating the demand for kegs, TBS has been in rough shape for some time. In fact, it hasn’t turned a profit since 2017, well before the pandemic upended the economy.

The Beer Store’s poor performance should lead Ontario consumers to ask the age-old question: why do we tolerate any entity having a virtual monopoly on the retail sale of beer? Even worse, why is its near-monopoly status protected by law?

For those who don’t know, which is approximately 68 per cent of Ontarians, TBS is a privately owned, government-protected monopoly first established on the heels of Prohibition. Its original purpose in 1927 was to create strict access points for beer retail, appeasing prohibitionists by supposedly protecting society from the evils of alcohol consumption.

Though the prohibition mentality is long gone its disappearance still hasn’t resulted in the liberalization of where Ontarians can buy beer. Right now, Ontarians only have limited options: The Beer Store, the LCBO (Liquor Control Board of Ontario), on-site sales at breweries, and a select number of grocery stores, 450 to be exact. Because of these limited choices, Ontario has the lowest alcohol retail density in all of Canada. Now would be a perfect time to liberalize the retail market for beer, specifically by granting convenience stores and any grocery store that wants to entry to the retail space.

The Beer Store naturally will fight tooth and nail to preserve its protected status but its arguments are not convincing.

Its first defence is legal — that it is protected under the Master Framework Agreement (MFA), signed under the Wynne government, which isn’t set to expire until 2025. But it is not unknown in Canadian history for legislatures to re-write agreements. Re-writing contracts does have its downsides but in this case revoking the agreement would serve competition and consumer choice, two very good causes.

The Beer Store also defends its protection under the banner of preserving jobs, keeping prices low, collecting revenues for the province, and protecting Ontarians from poor health outcomes. All these claims are bogus.

On job losses, TBS president Ted Moroz claimed in 2019 that alcohol liberalization would put the jobs of its 7,000 employees at risk. And well it might: competition usually doesn’t help protected incumbents. But researchfrom the Retail Council of Canada shows that expanding retail sales would actually create 9,500 new jobs in Ontario and boost GDP by $3.5 billion a year. Given Ontario’s financial position, any such boost is badly needed.

Originally published here.

Bar owners call on province to sell them cheaper booze

Ontario’s hard-hit hospitality industry is urging the province to give licensed bars and restaurants a reduced price on alcohol.

A new change.org petition started by David Ouellette, beverage director at the highly anticipated Vela (by Amanda Bradley of Alo and Robin Goodfellow of Bar Raval), opening this spring, asks for an immediate 25% reduction in the LCBO markup on alcohol sales to bar and restaurant licensees.

Ouellette is one of several people in the business calling out for lowered alcohol prices.

What’s really needed is wholesale pricing, but that, said Ouellette in a statement, will take too long. The25% reduction is a more realistic goal and will give fast relief to the sector.

Ontario’s antiquated liquor laws are the reason bars and restaurants pay full retail price through the LCBO for the alcohol they serve; to make any sort of profit they then add their margin, and consumers are left paying through the nose when they order a drink at a restaurant, bar or club.

John Sinopoli, co-owner of Ascari Hospitality Group and co-founder of SaveHospitality.ca — a grassroots coalition of Canadian restaurant and hospitality businesses — wrote about this issue last month in the Toronto Sun.

The upcoming Ontario budget expected in March, he said, “presents an opportunity for a regulatory change that is completely in line with the platform that Premier Doug Ford and the Progressive Conservative government campaigned on, i.e. reducing taxes for small business, modernizing the LCBO, and the sale of alcohol in Ontario.”

Sinopoli acknowledged that Ford’s government has already made an important change by allowing restaurants to sell alcohol with take-out.

Still, wholesale prices would be an economic game-changer; as the new petition states, even a 25% reduction will help the industry and the consumer, and will also, “Return huge dividends to the LCBO as this reduction in the markup will be the single most effective investment in future sales that the LCBO will ever make.”

What’s at stake are more than 30,000 establishments and more than 300,000 employees.

Support for Ouellette’s petition and the push for lower alcohol prices to bars and restaurants is coming from David Clement, North American affairs manager for the Consumer Choice Center.

Clement says this is one way the province could really help both consumers and bar and restaurant operations right now.

“Consumers want, and need, more competitive pricing at restaurants for beer, wine, and spirits, and this change would do exactly that,” said Clement.

“Ideally restaurants would be able to order beverage alcohol directly from producers without having to deal with the LCBO as the middleman. All the LCBO’s involvement does is ensure artificially-high prices for consumers.”

This change would also help businesses recover after the pandemic is finally over.

“This could be the lightning rod needed to get people back into restaurants post-COVID. It has an immense upside now, and after COVID is gone.”

There are other hoped-for changes, said Clement. Grocery stores that now sell beer and wine could also sell spirits, if the government would allow it.

The government has already shown itself willing to change, said Clement, via extended hours of sale, allowing delivery from restaurants and their commitment to eventually sell alcohol in convenience stores.

Lowering the markup now“is part of fixing our archaic and dated alcohol system.”

Originally published here.

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