Owners of a Calgary-based beer importing company say changes to provincial beer taxation have destroyed their business. They took their complaint to the Internal Trade Secretariat Thursday in Edmonton.
Mike Tessier, president of Artisan Ales, believes the changes the Alberta government made to beer tax policies in 2015 and 2016 are unconstitutional.
“We feel an unfair trade barrier has been put up against us,” Tessier said.
In 2015, the province introduced a $1.25 markup on beers from provinces outside of the New West Partnership. Alberta, British Columbia and Saskatchewan paid a graduated markup. In July 2016, the policy was changed to a flat tax, regardless of where they were made.
“If you’re producing beer and it’s coming into this province, everyone is being treated the same. That’s our direction,” Finance Minister Joe Ceci said in July 2016.
Now, the province offers grants to small Alberta breweries that sell less than 300,000 hectolitres each year. The Alberta Small Brewers Development Program was created to encourage the success of local brewers.
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Artisan Ales representatives said in a news release the changes violate section 121 of the Canadian Constitution: “All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.”
They also said the tax violates the federal Agreement on Internal Trade (AIT), which aims to reduce barriers to the movement of goods in Canada, according to the AIT website.
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Co-owner Bo Vitanov said she doesn’t oppose the government’s actions to help local breweries, but how the markup on products her business imports restricts trade, acting as a tariff.
“That’s clearly discriminatory, especially in terms of Canadian product that’s supposed to be treated equally,” she said.
Most of the products sold at Artisan Ales come from Quebec.
“We’re actually not against the government helping (Alberta) breweries, but this is so blatantly connected to the markup that that’s what we’re against,” Vitanov said.
Government legal representative Shawna Vogel argued the AIT allows for the provision of incentives.
“Incentives are tools government uses to promote government activity,” she said at the hearing.
While the grant incentives might benefit small breweries, Artisan Ales’ sales have decreased by almost 40 per cent.
“Our products are just disproportionately expensive now compared with local product,” Vitanov said, highlighting how the cost of operating the business increases as fewer people purchase their products.
Tessier said his company used to have the lowest craft beer prices in Canada. Now, they’re the second highest, after Newfoundland.
“Basically, a policy destroyed our business,” Tessier said. “Our profitability of our company is down 86 per cent in one year, where we’ve had positive growth every year.”
“The government’s job isn’t to pick winners and losers, and that’s exactly what they’ve done here.”
A decision on the matter is expected to be released in July.