Beer battle brewing between Alta., Sask.
Brewery CEO says higher taxes will mean customers pay more
The head of a major Saskatchewan brewery is “shocked and confused” by a change to Alberta’s beer tax regime proposed by Rachel Notley’s NDP government.
“We just felt, at the end of the day, everybody’s been talking about breaking trade barriers down, not putting more up, (and) this appears to be going against that grain,” Great Western Brewing Co., president and CEO Michael Micovcin said.
Alberta’s government announced last week it will be ditching a graduated markup rate for small craft brewers in B.C., Saskatchewan and Alberta. Instead, all beer sold in the province will be taxed at the rate of $1.25 per litre.
Alberta brewers will get some of that money back through a yetto-be-released grant system. Few details are available but Alberta’s finance minister said money used for the grants will be collected from the higher markups.
The decision has led brewers in the other two provinces to claim preferential treatment is being granted.
Micovcin said Great Western Brewing is currently taxed at the rate of $0.47 per litre in Alberta. He declined to reveal the private company’s annual sales figures, but said it does about 60 per cent of its business in Alberta and the increase will be significant.
“We’re going to be forced to pass on the higher tax rate to our customers and, in turn, our consumers. You could see the price of a case of beer — 24 cans — going up by almost seven dollars a case,” he said. “It’s a very material increase.”
While Great Western Brewing is waiting to learn more about the proposed grant system for Alberta brewers before deciding how to proceed, trade barriers are generally bad for business, Micovcin said.
“I think these types of preferential trade deals are not good for anybody. It’s a trade barrier that will (lead to) more trade barriers. I just don’t think this is healthy for our economy but, at the end of the day, we’re going to have to survive as a business.”
The Saskatchewan government is also criticizing Alberta’s new policy.
“We’re not happy with this at all. We’re going to look at what we need to do to offset, if there are things we can do to offset,” said Don McMorris, minister responsible for the Saskatchewan Liquor and Gaming Authority (SLGA).
The deal has been criticized for allegedly violating the New West Partnership agreement, which is a free-trade deal among the three western provinces.
McMorris said Alberta is “offside with the intent of the New West Partnership agreement.” He argued the changes will also lead to reduced selection and higher prices for Alberta customers as out-of-province brewers look elsewhere for sales. “It really gets away from freer trade from province to province,” McMorris said.
McMorris signalled at least some appetite for retaliation should Notley’s government keep its current course — opening the door to potentially re-examining markups on Alberta beer and other liquor products sold in Saskatchewan — but cautioned it is still early in the process.
Premier Brad Wall is expected to raise the issue with Notley at the premiers’ meeting in Whitehorse later this week.
Alberta breweries sold 359,904 litres of beer in Saskatchewan representing 0.51 per cent of Saskatchewan sales in 2015-16.
Last fall, Alberta’s NDP government raised taxes on imported beer brewed outside of New West Partnership provinces. In response, Toronto-based Steam Whistle Brewing took the province to court over the higher markups, arguing the government’s move was a barrier to interprovincial trade.
A followup hearing is taking place in August. It is unknown what impact the recent markups will have on that front.