Province wins appeal on beer markups after court rules hikes were not taxes

The province won’t have to pay two breweries more than $2 million for a markup regime imposed by the previous Ndp-led government following a court of appeals decision.

In its ruling, the Alberta Court of Appeal on Monday overturned a prior decision that determined the markup of $1.25 a litre on beer and a related rebate program were unconstitutional. The appeals court disagreed with this decision since the markup regimes in 2015 and 2016 were not technically taxes and the Alberta Gaming and Liquor Commission (AGLC) had the right to impose such a regime.

“The markups are properly characterized as proprietary charges which (AGLC) charged as part of the price for beer it sells to retailers,” the appeals court decision states.

“The 2015 markup and 2016 markup were not taxes, so they do not breach (the Constitution).”

In late 2015, the NDP brought in changes to the province’s beer markup system. When the changes were first rolled out, breweries in Saskatchewan, British Columbia and Alberta were exempt from paying the $1.25-per-litre markup on beer. That changed in the summer of 2016 when the exemption ended and Alberta brewers became eligible for a grant program instead.

Saskatoon-based Great Western Brewery Co. and Toronto-based Steam Whistle argued the AGLC policies violated the Constitution by creating interprovincial trade barriers.

The appeals court ruled that the markups did not violate the Constitution since it was legislated and not classified as taxes. The court also noted retailers paid the markup, not the breweries.

“We will be reviewing the judgment in detail in the coming days,” Jerrica Goodwin, press secretary for Treasury Board and Finance, said in an email.

“We are pleased that this decision could mean that Alberta taxpayers will not be financially responsible for the failed protectionist policies of the NDP that led to this court action in the first place.”