BREW-HAHA OVER BEER
Alberta tax a ‘declaration of war’
Saskatchewan’s economy minister blasted Alberta Premier Rachel Notley and her governing NDP for jeopardizing the future of Saskatchewan’s brewing industry with a “protectionist” tax on beer made outside Alberta.
“Make no mistake, the massive Alberta NDP tax hike on Sask.-produced beer was nothing less than a declaration of war on Saskatchewan-produced beer,” Jeremy Harrison told reporters at 9 Mile Legacy Brewing Co. on Thursday in Saskatoon.
In August, Alberta ditched a graduated markup meant to protect small brewers and instead imposed a $1.25-per-litre tax on all beer sold in that province. The markup will be offset by grants for Alberta-based brewers.
Harrison said the policy reflects a growing protectionist sentiment in Alberta that flies in the face of the rest of the country’s shift toward globalization and open trade.
The Saskatchewan government “got nowhere” when it attempted to reason with Notley and dissuade her government from imposing the new tax, he said.
“It imperilled the very future of our regional brewer.”
Great Western Brewing Co. sells about 50 per cent of its products in Alberta, and has watched its $0.47 per litre markup more than double over the last two months.
The Saskatoon-based company said earlier this month that it was filing a court challenge, arguing that Alberta’s new policy violates constitutional protections for trade between the provinces. While the company is still contending with a net deficit, new changes to Saskatchewan’s liquor production rules announced on Thursday “take a lot of risk off the table,” Great Western president Michael Micovcin said.
The altered rules come into effect on Nov. 1 and involve changes to the government markup on beer sales in Saskatchewan.
Under the current system, breweries that produce less than 500,000 litres per year and distribute their products through the Saskatchewan Liquor and Gaming Authority pay a markup of 74 cents per litre, while larger brewers pay $1.415 per litre.
The new scheme is graduated, with seven different categories based on production volume. The new markups range from 40 cents per litre for the smallest breweries to $1.565 for the very largest. Great Western will pay 75 cents per litre.
“It’s very significant for us,” Micovcin said. “It helps us weather the Alberta storm. It also still allows us to make the investments that we had planned to (make) in the province of Saskatchewan and in our brewery.”
The province also announced a graduated production levy for breweries selling directly to customers. Now breweries making up to two million litres annually can distribute their own beer, compared to the old system’s cap of 500,000 litres per year.
Shawn Moen, who co-founded 9 Mile Legacy, said the new rules add to other regulatory changes announced in early October. While the province’s rules are still catching up to other jurisdictions, they should help his company, he added.
“The suite of changes actually makes a small brewery like ours financially viable.”
Harrison said while it’s not clear if slashing the beer markup will have an effect on the government’s revenue stream, the improved regulations will lead to more economic activity in the province and allow the beer industry to grow.
“What we’re doing is defending our industry against predatory trade practices on the part of the Alberta New Democrats.”