Go­ing up

The Beacon (Gander) - - Editorial -

You can cry in your beer if you want to. But you might have to pay more for that beer — more every sin­gle year — be­fore you start the cry­ing. In the next few weeks, the fed­eral ex­cise tax on al­co­hol will rise. It rose last year, too. It’s ris­ing this year be­cause the fed­eral govern­ment, in last year’s bud­get, de­cided to pass leg­is­la­tion build­ing a con­stant in­crease to the tax, an in­crease tied to the con­sumer price in­dex.

In the fed­eral bud­get, it looked like this: “Bud­get 2017 pro­poses that, to main­tain their ef­fec­tive­ness, ex­cise duty rates on al­co­hol prod­ucts be in­creased by 2 per cent ef­fec­tive the day after Bud­get Day, 2017, and that rates be au­to­mat­i­cally ad­justed to the Con­sumer Price In­dex on April 1 of every year start­ing in 2018.”

It’s a sneaky way to in­crease taxes with­out ac­tu­ally hav­ing to tell any­one you’re do­ing it.

Some might ar­gue that a lot of taxes do that al­ready: if you’re in a tax bracket that pays, say, 17 per cent in­come tax, and your in­come rises, so does the ac­tual amount of tax you pay.

The dif­fer­ent thing about the ex­cise tax? It will rise even if the price of your prod­uct stays the ex­actly the same, so the cus­tomer will see a higher price, but that money will go to the govern­ment, not the pro­ducer. At least in the in­come tax model, you still get to keep part of your in­creased pay.

In a sense, the ex­cise tax change in­sti­tu­tion­al­izes tax in­creases. And it’s bad pol­i­tics.

Beer mak­ers are mak­ing the most noise about it right now, ar­gu­ing that al­most half of the price of beer is taxes, and the es­ca­la­tion of the ex­cise tax alone is a 1.51 per cent in­crease that will then be piled on with match­ing in­creases in pro­vin­cial liquor sales price markups and HST.

The fed­eral govern­ment looks to be plan­ning the same thing for weed as well, say­ing in the 2017 fed­eral bud­get, “As the govern­ment moves for­ward with a new tax­a­tion regime on cannabis, it will take steps to en­sure that tax­a­tion lev­els re­main ef­fec­tive over time.” (In case you hadn’t re­al­ized it, “ef­fec­tive over time” is a eu­phemism for “con­stantly in­creas­ing.”)

The prob­lem?

Well, the most ob­vi­ous one is that as well as in­sti­tu­tion­al­iz­ing the tax in­creases, the move cam­ou­flages them. Gov­ern­ments won’t have to pub­licly say they’re in­creas­ing a tax and bring those tax changes for­ward to the House of Com­mons and to pub­lic view.

It might be true that, as Ben­jamin Franklin said, there is noth­ing cer­tain ex­cept death and taxes. But build­ing in a per­ma­nent es­ca­la­tor?

We’d have to change the say­ing to “noth­ing is cer­tain, ex­cept death, taxes and au­to­matic tax in­creases.”

When a govern­ment in­creases a tax, it has to jus­tify that in­crease.

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