Les Canadiens se font tremper par les taxes cachées sur l'alcool

Federal ‘escalator tax’ effectively hides annual increases, removing discussion from the democratic process

Doug Ford’s “Buck A Beer” proposal has made alcohol regulation a topic of discussion again. Many working class Ontarians praise Ford’s move, even as just a gesture, because it showed consumers that help was on the way to stop rising prices.

Although “Buck A Beer” was designed to give consumers some relief, Premier Ford still plans on increasing Ontario’s beer tax, and has been rightly criticized for it. On Nov. 1, the tax on draft and non-draft beer will increase by three cents per litre, nearly a 10 per cent increase.

That said, there is another, much larger, discussion to be had when it comes to alcohol policy, specifically the federal government’s escalator tax on beer, wine, and spirits. Most consumers don’t know that 47 per cent of the price of beer goes directly to government.

When we look at spirits, that figure is even more astonishing: 80 per cent of the price of a bottle of spirits is tax. What makes these figures more troubling and worrisome for consumers, is that due to the federal government’s alcohol escalator tax, the tax on all alcohol will automatically increase each and every year, forever.

The escalator tax will mandate that the sin tax on alcohol increases, at a rate indexed to inflation, each year on April 1, regardless of who is in office.

L'impact de cette taxe perturbera évidemment les brasseurs et les distillateurs qui fabriquent ces produits, mais plus important encore, elle aura un impact sur les consommateurs et nuira de manière disproportionnée aux consommateurs à faible revenu. Pour ces consommateurs à faible revenu, les augmentations perpétuelles de taxes signifient qu'ils devront chaque année dépenser davantage pour ces produits. Pour beaucoup, cela semble être une punition cruelle pour le crime de vouloir boire une boisson alcoolisée et socialiser ou se détendre.

Comparing how alcohol is taxed in the United States rubs salt in the wound for Canadian consumers. For the average American, buying a case of beer has $4.12 in taxes associated with it. For the average Canadian, the tax paid on that same case of beer is over five times higher, at $20.31. The federal tax rate on beer in Canada is 2.8 times higher than in the United States, while the average provincial tax rate is over six times higher than the average U.S. state tax rate.

The same is true for excise duties for spirits. The excise tax rate on a bottle of spirits in Canada is 83 per cent higher than the tax rate in the United States. While taxes go up on Canadians, our American friends are having their tax burden reduced. It’s pretty clear that Canadian consumers are getting a raw deal when it comes how our government treats us.

Those who support these sin taxes support them for two reasons. The first is the claim that higher taxes will discourage consumption. The second is that increasing taxation will increase government revenues. But these reasons contradict each other. If sin taxes discourage use, then obviously government revenue won’t increase. If sin taxes don’t discourage use, then the tax is nothing more than a tax grab. Advocates on the other side of this issue have been simultaneously perpetuating these contradictory justifications, and no one has called them out for it.

At the end of the day we are talking about adult consumers, and adult consumers deserve to be treated with respect, as adults. Before any new taxes are introduced, consumers should be consulted, or at the very least given the opportunity to vote for politicians who either are in favour, or oppose, new taxes.

The escalator tax removes that discussion from the democratic process and eliminates consumers from the discussion all together. The government needs to stop its hammering away at the disposable incomes of Canadians, and let adult consumers enjoy these products in a responsible way.

David Clement is the North American Affairs Manager for the Consumer Choice Center. Follow him on Twitter at @ClementLiberty

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