July 28, 2016 —New Alberta Subsidy for Brewers Still Unconstitutional
The new subsidy program for Alberta brewers announced today by the Government of Alberta is an unconstitutional barrier to interprovincial trade in violation of section 121 of the Constitution Act, 1867.
Section 121 states “all articles of the growth, produce or manufacture of any one of the provinces shall … be admitted free into each of the other provinces.”
This constitutional guarantee was intended by the Fathers of Confederation to create a free trade zone within Canada. And as the court recognized in the Canadian Constitution Foundation’s recent case of R. v. Comeau, section 121 prohibits provinces from erecting barriers to the free movement of legal goods between provinces.
Last fall, on October 27, 2015, the Government of Alberta announced that it would tax beer from small breweries outside the New West Partnership (British Columbia, Alberta, and Saskatchewan) at a significantly higher rate than it would tax similar breweries located within those provinces. The purpose was to protect Alberta’s craft brewing industry from competition.
On December 17, 2015, the Canadian Constitution Foundation (CCF) informed the minister responsible that this differential treatment was an unconstitutional tariff and a barrier to free trade that violates section 121 and longstanding Supreme Court precedent.
Today, Alberta announced that the policy is changing again. Unfortunately, based on the the scant information accompanying the release of the latest policy, it appears that nothing of constitutional significance has changed.
According to today’s announcement, Alberta’s new subsidy program will be “based on sales volumes of Alberta-made beer sold in the province.” Because a rebate to Alberta brewers based on volume of sales would just be a back-door version of the previously-proposed discriminatory tax, such a subsidy would fail to remedy the constitutional problems of the October 27, 2015 policy.
As CCF lawyer, Derek From, said of today’s announcement:
"Section 121 of the Constitution Act, 1867 is clear: a provincial government cannot erect tariff barriers to interprovincial trade. While Alberta’s new plan applies the same mark-up to beer from each province, only brewers from Alberta will be indemnified against the increased costs. But a tariff is a tariff, and Alberta cannot do indirectly what it is not permitted to do directly. A court will have no problem seeing through this clumsy sleight of hand."