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Thursday, January 23, 2014

Social responsibility is stifling Ontario’s wine industry

The Ontario Government through Premier Kathleen Wynne claims it wants to help the Ontario wine industry. This is not at all surprising considering the main centre of the industry is the Niagara region and there is a by-election scheduled there for February 13.

The jewel in the crown of Wynne’s latest political bribe wine strategy is a new allocation of $75-million over five years to support the industry. Here’s an excerpt from a recent report by in Toronto Star:

“They’re [wine industry] local, they’re good for our economy, and they support good jobs,” she [Premier Wynne] told winemakers at the Niagara College Wine Visitor and Education Centre in Niagara-on-the-Lake.

“In the last 30 years, this industry has just burgeoned. Your sector is an Ontario success story. We can set our heights higher and take this industry to the next level.”

The report also tells us that Wynne will allow the sale of Vintners Quality Alliance (VQA) wines (from Ontario-grown grapes), at farmers markets. It wasn’t that long ago the Liberals were trying to justify their stranglehold on the distribution and sale of wine by claiming that government stores were the only ones able to apply social responsibility regarding sales of alcoholic beverages.

Apparently, the operators of farmers markets are more trustworthy and socially responsible than those Ontarians who run grocery stores and convenience stores. Go figure.

This is all such crap. At every turn, Ontario governments have utilized tax and pricing strategies designed to turn plonk into a luxury item available—at least in an affordable way—to only the well-off in the province. I say “plonk” because good wines have been out of reach of the pocket books of ordinary people for decades.

Before wine even reaches the clutches of the monopoly—the Liquor Control Board of Ontario (LCBO)—it’s loaded up with sales-dampening taxes in the form of federal tax, Basic (Ontario) Tax, Volume (Ontario) Tax and Environmental (Ontario) Tax—over 30% of Ontario-levied taxes. Then, to that, LCBO adds a whopping 65.5% mark-up and, when you purchase a bottle, they add a further 13% HST. Oh, yes, a huge tax-on-tax rip-off. Of course, when governments rip you off, it’s called social responsibility. I kid you not.

If Kathleen Wynne really wanted to support Ontario’s wine industry, she would:

  • eliminate tax up to the point of sale to consumers, i.e., retain the HST;
  • allow free market distribution and sale, i.e., no LCBO monopoly;
  • eliminate government-mandated mark-ups and minimum pricing.

Unions won’t like this, of course, and part of the reason the Grits want to hang onto LCBO retail stores is that they provide over-valued, cushy jobs to their union friends. Unions, of course, provide millions of dollars in various forms of election support for the Ontario Grits. Continuing with the LCBO is part of the tax-payer funded payback to the unions.

If the premier did as I suggest above, Ontario wines would be on the same playing field as tens of thousands of other products consumed in the province and the Niagara (and elsewhere) wine industry would thrive and she’d not have to use tokenism to buy votes in the region.

5 comments — This is a moderated blog and comments will appear when approved. Please don’t resubmit if your comment doesn’t appear immediately, and please do not post material that is obscene, harassing, defamatory, or otherwise objectionable.

  1. Even more absurd, is the government control of Ont beer sales. I just returned from my local LCBO store searching for a local dark beer, suitable for cooking and winter sipping. As always I was referred to the Guniness selection, despite Ont having dozens of small breweries producing quality products drinks of all tastes. This store had beer from a dozen countries but of course nothing locally brewed although I know there are several breweries within a few miles. The LCBO, who endlessly crow about being the largest purveyor of alcoholic drinks worldwide, much prefer dealing with similar giants like Guinness, or their Belgian counterpart. Local brewers are too small to be bothered with. This is also their attitude to small wineries.
    It makes no sense to brew beer in Ireland and ship it in CO2 enhanced cans half way around the world, all the natural products for brewing are here right at hand. The old adage that the local beer is always best applies even more today, with the trend towards locally grown food.
    In all its operations, the LCBO is an outdated dinosaur, serving only as a cash cow for government and a source of overpriced union jobs for a privileged staff.

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    1. A thoughtful analysis, Martin, and one that had not really occurred to me. Small brewers (and we consumers) are at the short end of the stick and large operations—mainly foreign owned—reap the benefits.

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  2. I certainly agree with the idea of allowing grocery and convenience stores to sell beer and wine. I think a lot of the opposition and success is it seems many Canadians and Ontarioans have a strong statist viewpoint. One British commentator back in the 40s commented on the nanny state attitude towards alcohol in Canada. As for lowering liquor taxes, I disagree with that since government's need revenue at least for now and I would rather they keep that then raise taxes elsewhere. Now once the budget is balanced and the debt to GDP ratio is brought down then maybe we can talk about lowering liquor taxes. I do support ending minimum pricing however, although I suspect opposition would not just come from the unions, but also many larger producers as the LCBO and Beer Store are a sweet deal if you are big enough to get a listing, it just sucks for the smaller ones who cannot get a listing. At least in a free market you don't need to be sold at every liquor store, you just need to fine some to carry your products.

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    1. Anon 1:03 AM, I agree with your comment, except, "As for lowering liquor taxes, I disagree with that since government's need revenue at least for now and I would rather they keep that then raise taxes elsewhere."

      Governments always need revenue, regardless of the state of the debt or current budget. However, singling out a single class of products (and industry) on which to place an obscenely heavy tax burden is just wrong. So on principle I like to see the taxes eliminated and the HST left in place as it is for pretty well all other products, i.e., a level playing field.

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    2. I agree that governments need revenue. I suggest cutting off all revenue until they learn how to control spending and balance budgets.

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