Beer drinkers of Alberta, take note: the government is coming for your beer. Not to take it, but to make it more expensive.
In particular, with its recent budget, the governing NDP have taken aim at craft beers produced east of Saskatchewan. The changes are aimed toward any craft beer produced outside of the “New West Partnership” provinces of Alberta, Saskatchewan and British Columbia. Beers produced within this area will be less expensive, which is good. However, beers produced east of Saskatchewan will be more expensive. This is bad.
If your craft beer of choice happens to be one brewed within that area, drinkers could see a price reduction of as much as .50 per 6-pack, or .50 per pint. It’s not an overwhelming change, but it should be welcome for many drinkers. This comes via a .48 per litre blended tax decrease on the sale of craft beers brewed within the New West Partnership region. It’s good, but not great. However, should your craft beer of choice be brewed outside of that region, prices could increase by a great deal more. A tax of $1.25 per litre may not seem bad at first glance, but it could amount to as much as $1.50 per 6-pack, $6.00 per 24-pack. That is an overwhelming change, one that hits beer drinkers directly in their pocketbooks. Even big foreign-owned domestic brewers have come through this better than non-NWP craft breweries. The balance of these changes amounts to dragging $39 million out of the pockets of consumers.
“Why does the Alberta government want to build barriers between craft beer brethren across the country in an industry segment characterized by camaraderie and collaboration? Why would the Alberta government now treat legitimate, Canadian entrepreneurial companies as though they were import aggressors,” asked Cam Heaps of Steam Whistle Brewery. “Manwhile providing minimal tax impact to the big domestic brewers who channel profits out of Alberta to foreign-owned parent companies?”
If this policy change would help Albertan craft breweries sell their product in Albertan liquor stores, that would be one thing. But the margins of change are well within the price elasticity of demand. The price increases on products such as Steam Whistle may drive some consumers away from it, but the .50 reduction per 6-pack for NWP craft brews is unlikely to effectively attract consumers to it instead. Rather, it’s more likely that consumers being pushed away from non-NWP craft brews may simply choose to resort to a more familiar “big” foreign-owned domestic product, such as Molson or Labatt.
There’s an irony in this than simply that. Craft beers are heavily favoured by young, urban, so-called “hipsters,” a demographic who overwhelmingly declared in favour of the NDP during this year’s provincial election. Now the NDP is thanking them for their support by effectively raising prices on the beers they prefer.
Many of the tax changes the ND proposed during the 2015 election likely appealed to these voters all the more because they weren’t increases on things that they themselves enjoy, or see themselves as having a stake in. Energy royalty increases appeal to them all the more because they likely do not work in an energy sector job. Corproate income tax increases likely appealed to them all the more because they don’t work for a large corporation, and don’t understand how their pension funds – provided that they’ve bothered to invest in one, or have one through their place of work – are invested. Income tax hikes likely appealed to them all the more because they don’t see themselves as earning enough to have to pay those taxes themselves.
In short, the NDP was able to attract the votes of these young, urban, so-called “hipster” voters by making a class warfare appeal. Now, in levying heavy new taxes on beers that these voters likely drink and enjoy, their class warfare chickens have come home to roost.
It may be tempting to take some comfort in this, as if this is a good thing. Really, it isn’t. This negatively affects all Alberta consumers, and it’s unlikely that this NDP government is done with this yet.