The Alberta NDP protectionist tax on beer announced by Minister of Finance Joe Ceci on October 27th, 2015 is unconstitutional under Section 121 of the Constitution.
The new tax favours local breweries and significantly increases taxes on imports and craft beers produced outside of Alberta, Saskatchewan and British Columbia that are part of the New West Partnership. Under the new changes, instead of being taxed by volume, $1.25 is applied to every litre of beer outside of the North West Partnership. So this means that smaller breweries that were once charged by volume of production are now charged the largest tax rate.
This is where the issues arise – selectively taxing beer outside of the province is illegal within the bounds of the Constitution.
As a result, Ontario based Muskoka Brewery has now left the BC, Alberta and Saskatchewan markets, citing the increased taxes as the reason. Owner Gary McMullen says that the $2 increase per 6 pack was just too much to pass on to consumers and not only could have ended up pricing his product out of the market, but would have reduced profit margins significantly. Bo, an importer from Artisan Ales based in Calgary says her stock was taxed over night with no warning. And at a time where she usually has the most stock on hand to prepare for the Christmas season.
On top of this, Steam Whistle brewery based in Ontario, is also in the midst of court proceedings against the NDP as a result of waking up on October 28th to a 77 cent increase in taxes on their product. And they were recently granted an injunction by the Court of Queen’s Bench that suspended the increased tax on craft beer produced outside of BC, AB and SK until a hearing on the tax occurs on July 21.