After decades of discussion, numerous expert panels and several general elections, Ontario has finally embraced a modern retail marketplace for beer, wine and other lower-alcohol adult beverages.
Recommended Videos
On a per capita basis, Ontario has now jumped from the fewest authorized beer retailers of any province in Canada to third — behind only Quebec and Newfoundland and Labrador. Kudos to the Ford administration for providing real choice and convenience to adult consumers who enjoy having an occasional beer with family, friends, neighbours or co-workers.
But more work is urgently needed to make sure beer remains affordable for hard-working Ontarians in the new expanded beer retail marketplace.
The Ford administration must also be commended for over-riding the Wynne-era imposition of annual inflation-based indexing of beer taxes and freezing beer tax rates at 2018 levels.
Even with those freezes, however, the reality is that Ontario’s current web of Byzantine beer taxes, mark-ups and fees imposes an overall fiscal cost on beer consumers exponentially higher that what’s imposed on consumers in other neighbouring grocery and corner store beer retail environments, including those in Quebec, New York State or Michigan.
This level of beer taxation, largely hidden from the view consumers, is unsustainable in an open retail environment with thousands of new private retailers and their associated higher distribution and retailing costs.
Beyond the critical need to simply eliminate the inflation-indexing of beer taxes, it’s crystal clear that targeted beer relief is essential to support not only beer consumers but also new smaller independent retailers, as well as supplying brewers of all sizes.
One specific example worth highlighting is the necessity of eliminating the LCBO’s retailing cost-of-service fee on beer products not actually retailed by them. Where no specific business services are provided, no fees should be imposed.
Recommended video
More generally, LCBO fees must be standardized, transparent, and based on independently audited costs.
Our communities are stronger with a vibrant, successful local brewing presence, and we should all value their contribution. At the same time, Ontario must avoid the missteps of some jurisdictions that introduced market-distorting measures that created both a race to the bottom and an industry overly dependent on ever-growing subsidies.
Beer tax policy must be transparent, and encourage continued investment by brewers in their facilities, brands and innovation, including in developing and bringing to market new low and non-alcohol options.
Beer taxes should also support the important role beer plays in the profitability of licensed bars and restaurants.
Targeted beer tax relief means support for producers of all sizes. This support should reflect new brewer start-up costs and their economies of scale, while recognizing Ontario’s and Canada’s internal and international trade law obligations.
It’s also time for Ontario to eliminate the antiquated “can tax” on beer. It is completely nonsensical that an aluminum can containing beer includes a 10-cent environmental levy (including the provincial portion of HST) when the same can containing soft drinks, juice or energy drinks is exempt.
Since beer taxes are already too high, taxing the container as well is simply not appropriate.
The Ontario Ministry of Finance has launched an alcohol tax review that is looking at a range of issues including how to reduce red tape, ensure fair taxation for private retailers, maximize local investment and facilitate socially responsible sale and distribution of alcohol.
We look forward to sharing our perspectives and expertise in each of these areas.
According to Statistics Canada, Ontario brewers contributed $1.2 billion to Ontario’s economy last year and provided a living-wage pay cheque to more than 8,500 families.
We need to ensure that the economic and social benefit of a strong vibrant domestic brewing sector is available to future generations by making the right taxation decisions today.
— CJ Helie is president of Beer Canada, which advocates on behalf of Canadian brewers and beer consumers. Its member companies brew 90% of all domestic beer consumed by Canadians annually.