Canada, AB: Alberta’s tax system favours local brews, importers complain

There are tears in the beers of local importers of suds who claim Alberta’s tax system heavily favours local brews, Calgary Sun reported on June 27.

Bo Vitanov and her husband Michael Tessier, owners of Artisan Ales, say last fall’s changes to liquor taxation is hurting importers, with some closing up shop altogether.

“Several of our friends are losing their businesses over this,” said Tessier.

“They put up protectionist barriers for Alberta brewers and ... in my opinion, destroyed a lot of Alberta businesses.”

Artisan Ales represents small, high-end mirobreweries in Quebec, France and Belgium. And it’s those products crafted outside of the western provinces that are taking a hit.

In October, Alberta raised taxes on imported beer by 5% (21 cents for a case of beer), but its changes to the graduated tax system that is crippling importers, says Vitanov.

The incremental tax rates that go up as production rises, are now only for small craft brewers in Alberta, British Columbia and Saskatchewan — as part of a New West Partnership.

“We were hit with a 525% increase in tax. We deal with extremely small breweries that are outside of the New West Partnership. We went from 20 cents a litre to 1.25 a litre,” said Vitanov.

“Without us changing anything, our shelf price went up 20%. An increase to a six-pack is about C$3.”

Every province has a graduated tax system for beer, designed to give small brewers a break.

But Alberta is the only one to limit that geographically.

The couple complained to Minister of Finance Joe Ceci but he said the changes were intended to grow the beer business in Alberta, and put local microbrewers on a level playing field — something the Alberta Small Brewers Association lobbied for for years.

“The new beer markup also responds to the concerns of local liquor producers regarding the need to align Alberta with other provinces that offer various supports for local manufacturers,” Ceci replied.

Vitanov and Tessier are convinced the tax structure contravenes the federal Agreement on Internal Trade (AIT), enacted in 1995 to eliminate barriers to trade, investment and mobility within Canada. They have formed an association with like-minded importers and launched a complaint with the agency.

They are not the only ones fighting back. Muskoka Brewery pulled its products from Alberta shelves while Ontario-based Steam Whistle launched a court action.

It won an injunction in January against paying the increased tax until it’s settled in court on July 21.

The dispute over taxes come at a time of record liquor sales in the province. Numbers released in May by Statistics Canada show Alberta liquor stores sold a record C$2.5 billion worth of alcoholic beverages in 2014-15.

30 June, 2016