The Alberta government is seriously considering a none-too-sober pitch to raise beer taxes. Specifically, the proposal is to raise taxes on beer brewed outside of Alberta by small and medium sized brewers.

This would have the effect of not only raising the price of beer, but reducing the enviable selection available to Alberta consumers.

Beyond the GST and business taxes paid by breweries, suds sold in Alberta are slapped with an additional federal beer mark-up (tax) of 11.1 cents per can, and a provincial beer mark-up (tax) of 34.8 cents per can. In other words, most cans of beer sold in Alberta have an extra 45.9 cents of tax added on, which works out to $5.50 of tax on a 12-pack of beer, plus the GST.

However, breweries that have smaller worldwide production levels are eligible for small-brewer tax rates. These rates work out to between 8.9 cents and 23.9 cents per can, or between $1.07 and $2.87 in beer tax on a 12-pack. These rates work out to between 8.2 cents and 23.6 cents per can, or between $0.98 and $2.83 in beer tax on a 12-pack.

Eleven of Alberta’s small and micro-brewers along with the three major Canadian (although now mostly foreign-owned) breweries, are trying to convince the government to eliminate the small brewer tax rate for those small and medium sized breweries who don’t brew their beer in Alberta.

Considering there are 136 small and medium sized breweries from around the world that sell their products in Alberta, the change could be significant.

For some reason, the big and very small brewers have set their target on Minhaus brewery, a Calgary-owned company that brews most of their value-priced beer in Wisconsin. However, if this change is approved by the province, beers like Steam Whistle pilsner, Mill Street’s organic lager (both brewed in Ontario), or Scotland’s Innis & Gunn, along with hundreds and hundreds of other beers brewed all over Canada and the world, would see their prices jump by between $2.47 and $3.32 per case.

Being interviewed on CTV’s Alberta Primetime a few weeks ago, Kevin Wood, owner of Red Deer’s Drummond Brewing (one of the small 11 requesting the tax hike) said, “The current mark-up [tax] is competitive, but it is competitive for everybody.” He said it as though that were a bad thing.

Mr. Wood went on to explain how liquor stores in Saskatchewan, all of which are owned and run by the government, won’t stock his beer in their stores. This is unfortunate for both Drummond Brewery and for the residents of Saskatchewan.

Thanks to liquor privatization in Alberta in the early 90s, Albertans now enjoy more selection of different beer, wine and liquor products than any other jurisdiction in Canada. This is a good thing.

However, following Saskatchewan’s protectionist practice of freezing out craft beer from elsewhere in Canada and the world, would be foolish.

Both the players trying to elbow their competition out of the market place and Deputy Premier Lukaszuk, have called the small brewer tax rate a “subsidy” for out of province breweries. This couldn’t be further from the truth.

This lower beer tax rate is much like the Alberta small business tax rate, ensuring that mom-and-pop shops don’t pay the full corporate tax rate.

The beer tax is an industry specific tax that few other industries have levied against them. If some in Alberta’s brewing industry feel that they are not competitive enough, the answer isn’t to raise taxes on their competitors – it’s to lower taxes on all brewers, equally.

One move might be to follow the federal government’s lead and create additional lower tax rates for brewpubs and very small local brewers. The federal government’s first tax rate doesn’t come into effect until the brewer produces 71,000 cases of beer in a year, in Alberta it’s ten times as high. Alternatively, if the top tax rate is too high for the big brewers to compete with smaller value-brands, lower the top rate.

During the Alberta Primetime interview, Jim Pettinger of the Alberta Small Brewers Association, lamented that “Alberta has made it extraordinarily easy to sell beer in this province.”