Government should get out of liquor business

The following is AEG’s monthly column by AEG President Josh Bilyk appearing in the September edition of Business in Edmonton Magazine. If you have tips or suggestions for future columns, please feel free to write or call. 

Without exception, Canada’s liquor laws are an appalling mess. The patchwork of protectionist rules across Canada, often rooted in the prohibition laws of Canada’s past, make liquor more expensive and more difficult (if not impossible) to transport.

Liquor restrictions also symbolize what often goes wrong when politics and economic policy intersect.

From coast to coast Canadian liquor laws, to varying degrees, treat liquor consumers as children, subsidize or otherwise favour local producers and punish outsiders from other provinces.

Since the 1990s Albertans have enjoyed the best liquor laws in the country, but that’s not saying much. Albertans can access virtually any alcoholic beverage produced on Earth through our mostly private system, but our system is bogged down with government regulations and high taxes.

Somewhere along the line the Alberta government decided it was desirable to have a small batch brewing industry in the province, but such a thing wasn’t possible in a truly free market. They can’t compete with big brewers on price, the argument goes, so they need a preferential tax rate to “level the playing field.”

For years small brewing operations have enjoyed a significant tax advantage over their big corporate cousins. Then the government decided to get fancy. They wanted to prevent small brewers in other provinces from grabbing market share from local producers. So the Notley government decided to limit the tax advantage to brewers within the “New West Partnership” provinces of British Columbia, Alberta and Saskatchewan.

Of course, this didn’t sit well with small brewers across outside the New West Partnership like Toronto-based Steam Whistle who promptly took the Alberta government to court seeking an injunction against the “discriminatory” practice. A Court of Queen’s Bench Judge agreed with the complainants and granted a temporary injunction.

Seeing the writing on the wall, the Alberta government decided to scrap their discriminatory tax policy and instead adopt a universal tax on small brewery products. No matter where the beer is brewed, craft beer sold in Alberta will have the same government tax. Instead of giving locals a tax advantage, the government will write them cheques to give them a leg up.

From on high thundered Saskatchewan Premier Brad Wall, furious with the Notley government’s new protectionist policy that would hurt Saskatchewan brewers. Turns out Saskatoon-based Great Western Brewing Company does 60 per cent of their business in Alberta.

Guess who, by orders of magnitude, has more protectionist liquor policies than Alberta? You guessed it: Saskatchewan. Not only does Saskatchewan have much higher taxes than we do here, but our brewers are lucky if they can even get their products listed in the government-run Saskatchewan system.

Liquor distribution and retailing has been a political football since confederation, and it’s time the government stepped back and let Canadians decide for themselves how to run their businesses and consume adult beverages.

Alberta has the best liquor distribution model in the country, even after the Notley government’s uninvited tinkering. If you are going to have a tax policy that favours small brewers, level the playing field for everyone regardless of geography, and let the chips fall where they may. Don’t subsidize any brewers with Albertans’ beer money.

Alberta brewers are some of the best in the world and can compete with everyone, anywhere. I invite all Albertans to join me in attempting to try every delicious one of them.

Alberta Enterprise Group is a member-based, non-profit business advocacy organization. AEG members employ more than 150,000 Canadians in all sectors of the economy.