As it turns out, the expansion of beer sales into corner stores and other licensed grocers could cost Ontarians more than expected.
In addition to the potential massive cost for taxpayers, the plan could also see the price of beer go up on store shelves across the province.
In a letter penned to Finance Minister Vic Fedeli, the chair of The Beer Store’s board of directors outlined the findings of a report that analyzes beer prices in Ontario.
“Contrary to what the Retail Council of Canada released yesterday, the attached is a rigourous analysis using statistically sound and accepted principles to objectively analyze pricing and taxes,” Charlie Angelakos wrote in his letter. “It is prepared by two of the world’s leading Ph.D economists who also have years of experience in the Canadian beer industry.”
The study compares prices, with and without taxes, on beer in Ontario to those in Quebec and Alberta.
According to Angelakos’ letter, the report makes the following conclusions:
- Prices at The Beer Store are significantly lower than prices in Quebec and Alberta,
- Ontario taxes on beer are 50% higher than taxes in Quebec and 29% higher than taxes
- 43% of the price of beer in Ontario is tax, compared to 34% in Quebec and 33% in
- Ontario consumers pay $4.23 more in taxes for a two-four equivalent than Quebec
consumers and $2.59 more than Alberta consumers.
- Because of Ontario’s high beer taxes, Ontarians pay more for beer than consumers in
- Beer prices in Alberta are significantly higher than in Ontario ($4.98/litre in Ontario and $5.54/litre in Alberta) – even though the tax rates in Alberta are much lower.
Angelakos wrote that in summary, the economists found that prices before tax in Ontario are far lower than in Quebec and Alberta, while taxes are higher here than in those provinces.
The letter states that the low-cost pre-tax prices on beer in Ontario are largely due to the current (also low-cost) Beer Store retail and distribution system.
According to the study, Angelakos states, the addition of the significant number of new beer retail outlets that Ford has proposed would “undermine” The Beer Store’s efficient, low-cost distribution system.
The letter reads that the result would be “significantly higher costs and beer prices and put the jobs of The Beer Store’s 7,000 employees at risk.”
Either the Alberta or Quebec distribution models being implemented in Ontario would mean high prices as well, with consideration to Ontario’s higher “tax rates and revenues,” the letter states.
The end of the document invites Minister Fedeli to a brief on the report’s findings.