E-Malt.com News article: Canada, AB: Alberta government raises taxes and introduces new policies to help smaller brewers

The Alberta government’s new budget includes tax increases on liquor and cigarettes. However, it also included policy changes to help level the playing field for smaller breweries, Global News reported on October 28.

The cost of cigarettes goes up by C$5 a carton. A case of 12 beers goes up 24 cents and a bottle of wine is increased by 18 cents.

“As far as consumers are concerned, the effect of this increase should be minimal,” said Bill Robinson, president and CEO of the Alberta Gaming and Liquor Commission.

Starting October 28, liquor mark-ups increase by five per cent. So, consumers will pay two cents more for a bottle of beer, on top of the eight cents added in the March budget; and 18 cents more for a bottle of wine, on top of 16 cents added in March.

The budget says the mark-up structure was “refined to promote made-in-Alberta products.”

One craft beer expert said the Alberta government shifted the beer playing field on October 27.

“In short the new policy does three key things,” writes Jason Foster in a blog post. “First, it restricts the small brewer’s mark-up to breweries based in Alberta, B.C. and Saskatchewan. All other breweries must pay the full rate, regardless of size. Second, the small brewer rate will now be graduated, meaning increased rates will apply only to production above the threshold, not to all production as was previously the case. Third, the full rate went up by five cents to C$1.25 per litre.”

Robinson said recent policy changes will help small manufacturers and should encourage more start ups.

“The model is built on a gradiated system,” he explained. “Essentially, the focus of the model is to give small brewers and start ups at the front of the system – from the zero to 10,000 hectolitres – an opportunity to get started and grow.

“As you grow and you produce more, the gradiated system allows you to move up,” said Robinson. “So essentially, the more you make…it grows by a small amount as you get up to the C$1.25 – those are the larger brewers who produce over 200,000 hectolitres.”

“The markup rates also continue to make it more cost effective for small producers to get their products in the hands of local consumers.”

He said Alberta consumers will benefit most from these policy changes.

However, some folks in the food service industry aren’t as pleased with the changes.

“Restaurateurs, bar owners and other food service operators in Alberta are struggling with rising food, liquor and labour costs combined with a slowdown in consumer spending,” said Mark von Schellwitz, Restaurants Canada’s vice president for Western Canada.

“Adding another five per cent liquor tax on top of the 10 per cent increase last spring is going to make this balancing act even harder.”

The government also introduced a job creation incentive program that will provide a grant of up to C$5,000 per new hire beginning 2016.

“While the new program is welcome, it does not change business realities,” said von Schellwitz. “If costs continue to rise while revenues continue to fall, it will be very difficult for employers to take advantage of the new job creation incentive.”

However, the hospitality industry was pleased the government continues to reject the idea of introducing a sales tax.


30 October, 2015