Talk about a fiscal hangover.
Gobsmacked by the new Quebec budget, restaurateurs across the province woke up Wednesday to a 25-per-cent tax increase on all the wines, spirits and beer they serve ¬- booze they’re already paying a premium for through the monopoly SAQ.
Not only that, the hike applies to the restaurants’ old stock, as well: specifically, every unopened bottle that was in their cellars and fridges between 3 and 8 o’clock the morning after the Parti Québécois government tabled its budget.
For restaurants with large wine cellars – sometimes numbering in the hundreds and even thousands – the paperwork and expense to comply is onerous.
The increase represents an extra 50 cents on every litre of wine or spirit, for a total of $2.47 per litre, and an extra 17 cents per litre of beer, bringing that tax to 82 cents.
(In real terms, the hike amounts to 37.5 cents more for a standard 750-ml bottle of wine, 57 cents for a 1.14-litre bottle of spirit, and 5.8 cents for a regular bottle of beer.)
The government wants the restaurants to pay the extra tax on their old stock by Dec. 22 – a kind of Christmas gift of cash to the state treasury – and, of course, pay it on any new bottles they buy from now on, too.
It’s all left a bad taste in the mouth of many a purveyor of food and drink.
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Restaurant owners taking a hit
“It’s a big hassle – for us, especially,” said Marco Mendes, co-owner of Le Latini, a fancy Italian restaurant in downtown Montreal with a huge wine cellar.
“We have close to 30,000 bottles,” he said, and they’re not all the usual 750-ml size; there are magnums (1.5 litres) and double magnums, right on up to 20-litre solomons.
“We’re talking about a lot of litres,” Mendes said. “They’re (inventoried) in the computer, but it’s still going to take a lot of time to count the bottles.”
Some have been aging in the cellar a long time, too, purchased as far back as the early 1980s. Some sell for $1,000, $2,000, $3,000 – one double magnum goes for nearly $7,000.
Luckily, the tax is a flat rate per bottle, not a percentage..
“Thank God for that,” said Mendes, who started managing the cellar – one of Quebec’s largest – three years ago for his father, Joao, the restaurant’s founder.
Tax increase
The tax increase – which, in lesser amounts, also applies to booze sold in stores – was a feature of the budget that new Finance Minister Nicolas Marceau unveiled Tuesday.
The minority PQ government expects to rake in an additional $33 million in 2012-2013 from the hike, and another $100 million in 2013-2014 and 2014-2015. In total, Quebec took in $438 million in alcohol taxes last year.
It didn’t make the full extent of the increase immediately apparent, however. Only buried deep near the end of the budget was the fact it applied not just to future purchases but also to current inventories.
More reaction
And it’s that backhanded tax grab that has most upset restaurateurs, led by the Association des restaurateurs du Québec.
“We’ve had an enormous number of calls and emails from our members,” said François Meunier, who’s in charge of public and governmental affairs at the association.
“People are insulted by the way the government is going ahead with this,” said Meunier, whose organization represents close to 4,500 owners of some 6,500 restaurants across the province.
A sign of the gall is apparent in the comments section of the association’s website, restaurateurs.ca.
Under a communiqué decrying the tax increase, Claude Gauthier writes:
“Oh, yes, the PQ government is back (with) a retroactive tax on stock that’s already been taxed and paid for in cash and at too high a price (to) a greedy state monopoly,” the Société des alcools du Québec, which last year had $1 billion in net revenues.
“You’ve heard of the PQ dictatorship? Well, here’s proof.”
Booze prices in Quebec
In general, beer and spirits are cheaper in Quebec than in most other provinces, but wine – at least, the lower-to-medium-priced ones – is more expensive.
The fine print of Tuesday’s tax hike came as a surprise to many in the wine business.
“I didn’t catch that the tax increase is retroactive – that’s unbelievable. It’s ridiculous,” said wine importer Sandro d’Annibale, who owns the Vinipassion agency and deals with restaurateurs a lot.
“I had dinner with one of them last night – he sells a lot of wine, but he didn’t catch that detail, either. We only understood that (the hike) was effective on all purchases starting today.”
At Latini’s, Mendes had more to say as the day wore on and the news sunk in.
“The restaurant business is already hard enough on the island of Montreal. This will just push some smaller places to close down,” he wrote in an email after the lunchtime rush.
“What will we have to do to stop all this? Go out on the streets like the students with our pots and pans?”
Maybe get over the hangover first.
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