March 21, 2017 - Press Release:
Is the Alberta government extending unconstitutional tax-and-refund scheme to distilleries?
Finance Minister Joe Ceci announced last Thursday the Government of Alberta’s intention to create a new program for craft distilleries “based on” the existing  Alberta Small Brewers Development Program. Despite a positive reception from some Alberta distillers who have lobbied the government for years for such a program, this move, like the unconstitutional tax-and-refund scheme for breweries that came before it, will end up hurting Alberta consumers with higher prices and less selection of out-of-province products.

The Canadian Constitution Foundation (CCF) is already supporting a complaint under the Agreement on Internal Trade (AIT) against the discriminatory craft beer tax scheme, which violates Alberta’s trade obligations and our constitution's “free trade clause,” section 121 of the Constitution Act, 1867. This same program is also the subject of two constitutional challenges, by Steam Whistle and Great Western Brewery, which will be heard sometime in the spring of 2017.


The CCF is genuinely surprised the Minister would cite the “success” of his government’s current unconstitutional craft beer program as a reason to expand it to include Alberta’s craft distillers. Since the Government of Alberta imposed its provincial trade barriers in October 2015, they have destroyed the Alberta advantage for craft beer and hurt craft beer drinkers in Alberta by inflating prices and reducing consumer choice.

For example:
  • Award-winning Quebec beers from Dieu du Ciel and Le Trou du Diable have seen a 525% increase in tax, with prices increased from ~$18 to $24 a pack.

  • Award-winning Muskoka Brewery from Ontario ceased operations in the province, citing “unacceptable conditions” created by the Government of Alberta.

  • Retailers are increasingly unable to sell premium craft beers from outside Alberta, because they are so much more expensive, meaning they go stale on the shelves and will not be re-ordered in the future, reducing selection.

  • Bars and restaurants no longer offer many popular out-of-province craft beers, as the new tax pushes the cost for a pint over the psychological $10/pint barrier.

  • This policy has hurt many local small businesses (bars, retailers, import agents) and craft beer drinkers used to a choice of the best beers from across Canada.

Despite the lawsuits, trade disputes, economic damage to retailers and importers, and the reduction in options for craft beer drinkers, Minister Ceci has said he looks forward to duplicating the damage done by the Alberta Small Brewers Development Program for the craft spirits industry. Consumers, retailers, and bar owners should be worried:
  • How much will prices rise?
  • How much will selection be reduced?
  • Will award-winning craft spirits from across Canada also experience a large tax hike, pricing them out of reach for consumers and discouraging retailers from carrying them at all?
  • Will retailers, bars, and small import agents be impacted the same way they have been with craft beer, with lower sales and real threats to the survival of their businesses?
Doing the same thing twice and expecting different results is a definition of insanity. If the distillers' program follows the example of the brewery program, there is every reason to expect the same harms to consumers. 

For precisely the same reasons, applying this discriminatory policy to spirits is illegal under our constitution and will also hurt Alberta consumers and businesses, not to mention wasting tax dollars as the government has to justify its unconstitutional measures in lawsuits it is bound to lose.

The Canadian Constitution Foundation (“Freedom’s Defence Team”) is a registered charity, independent and non-partisan, whose mission is to defend the constitutional freedoms of Canadians through education, communication and litigation.
 
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For further information, contact:

Derek James From
Staff Lawyer
Canadian Constitution Foundation
Toll-free: 888-695-9105 x. 103
dfrom@theccf.ca

Howard Anglin
Executive Director
Canadian Constitution Foundation
Toll-free: 888-695-9105 x. 101
hanglin@theccf.ca

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