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Make it easier to make beer in the NWT, Yk MLA urges

Regulatory barriers and high tax rates on locally-produced beer make it difficult for territorial brewers to be competitive, said Yellowknife North MLA Rylund Johnson on Tuesday in the legislative assembly. GNWT image

Yellowknife North MLA Rylund Johnson wants it to be easier to make beer in the Northwest Territories.

He said in the legislature Tuesday there's too much red tape tying up Northern brewers.

Johnson asked that an upcoming review of the Liquor Act consider lowering taxes on beer produced in the territory.

20 years behind Yukon

He compared the current relationship of NWT liquor regulations and brewers to the Yukon 20 years ago. That's when our neigbours to the west had just one brewery, as the NWT does.

Today, there are four of them in Whitehorse alone.

“There is an industry growing with people working, Northern labour," he said. "I hope one day I can stand in this House and another MLA can ask questions about local manufacturing of wine, beer, and spirits in this territory."

He said the "capital barrier," a way to describe the amount of money needed to start up a new brewery in the NWT, is "extremely high.

“Has the department conducted a review of the barriers that people face in wanting to get into this industry?”

In response, Finance Minister Caroline Wawzonek indirectly referred to the territory's sole beer producer, the NWT Brewery Company in Old Town. She said the popular business “is receiving a fairly significant discount in terms of the typical markup that would normally be seen.”

When more Liquor Act review information comes back, the Department of Finance will work with that company to figure out ways forward, Wawzonek said.

The planned review will look at barriers in the liquor industry and the newly formed red tape working group will also accept public feedback about barriers so they can be reduced, she added.

Beer tax rate too high

Johnson then compared the NWT's tax rate on locally-produced beer to that of Ontario's, an imbalance that harms the competitiveness of NWT brewers.

The tax, or "mark-up" for beer purchased by the NWT Liquor and Cannabis Commission (NTLCC) is $2.22 per litre for bottled or canned beer and $1.95 per litre for kegs, said Department of Finance spokesperson Todd Sasaki. 

For a manufacturer of beer in the NWT the tax is $0.67 per litre.  

Under Ontario's Taxation Act, which came into effect in 2007, eligible beer manufacturers can receive a refundable Small Beer Manufacturers' Tax Credit. They have to have made between 4.9 million litres and 30 million litres in the previous year to qualify.

The maximum tax credit available to Ontario brewers is $2,449,510 for non‑draft beer and $1,788,010 for draft beer on eligible sales between 4.9 million litres and 20 million litres.

“The reality is that anyone who is looking to brew beer in the NWT is never going to do it with local Northern labour and get to a price point anything comparable to the large producers in the south," he said.

Skip the middleman?

The Yellowknife MLA asked Wawzonek about allowing locally made beer to be sold directly to restaurants. That would circumvent the current model where producers sell their product to the NTLCC and then buy it back using taxes.

Wawzonek didn't directly respond to Johnson's question, but said the process of changing liquor regulations must be done methodically and in consultation with the community.

“One thing I have discovered in this role is that liquor brings out a myriad of different opinions. About whether it should be controlled or whether it should be more open and whether there should be more production or whether there should be less production. Do we need to change the way people can buy liquor, sell liquor? Those are exactly some of the questions we will be asking in the course of that.”