A Yellowknife bar owner says a looming spike in a federal beer tax will force alcohol-serving businesses to hike their prices, hurting consumers in the long run.
“The way these taxes are designed, it's always going to get passed on to the customer,” said Bob Stewart, owner of downtown's the Kilt and Castle Pub.
The tax hike in question, first introduced as the part of the federal government's 2017 budget, has come back into focus following the launch of a petition to kill the so-called “escalator” tax, which rises yearly in accord with inflation rates.
Backed by the brewer advocacy group Beer Canada, the online campaign calls for the feds to repeal the “hidden” tax, arguing that at 47 per cent, the current average tax on beer is already drowning business.
According to media reports, the new tax resulted in a two per cent increase when it took effect last year ,and it's expected to swell by about the same per cent this spring.
Stewart, who hasn't signed the petition yet but says he fully supports it, estimates he'll have to raise the price of alcohol at his bar by five per cent, an increase he say isn't justified by the “sin tax.”
While taxes on addictive substances like alcohol and tobacco have long been collected by governments, with funds being funneled back into support and prevention programs, Stewart says the type of tax misses the mark.
“I have a problem with governments who claim to 'combat poverty' and yet continue to raise taxes on items heavily consumed by blue collar workers, people in the middle class and below,” he said.
While Yellowknife North MLA Cory Vanthuyne calls the practice of taxing harmful products “responsible,” he says the looming hike doesn't reflect current social trends.
“It's been proven that alcohol consumption is going down, but now we're just going to continue to add more tax on. Those are the troubling concerns I have,” he said, adding that he attributes the drop in drinking rates to improved education and communication, not steeper alcohol prices.
“This, to me, just seems like the federal government is continuing to try to capture revenue for themselves. If you're going to do that, be mindful of the those who are trying to make a living of off ... businesses that sell alcohol,” Vanthuyne said.
Specifically, Vanthuyne emphasized the negative impact the tax hike stands to have on small brewers, namely Old Town's NWT Brewing Company.
“They are the kind of business we want to see succeed. The (owners) are a young couple. They're putting their life savings into this venture and at every turn it's been virtually a government speed bump,” he said, referring to past red-tape hurdles the microbrewery had to clear.
Yellowknifer was unable to reach The Woodyard Brewhouse & Eatery for comment before deadline.
But, Vanthuyne says he gives credits to the efforts of the territorial government to support small business growth, adding that its up to the federal government to evaluate its tax on beer.
In the meantime, the MLA says discourse is key.
“(By making) sure we're having the right discussions...hopefully we can minimize the effects,” he said.
Stewart, on the other hand, calls for more territorial tax autonomy to buck what he calls a “subservient” relationship with the feds.
“I think if locally we could take more control of how our people are taxed, I think that would be a start.”
Beer drinkers could see higher prices beginning in April, when the tax hike is set to roll out. Stewart plans on bumping up booze prices at the same time.