Friday, June 30, 2006

Booze isn't getting cheaper

If you plan on enjoying an alcholic beverage this weekend you might want to consider buying it before the GST cut. While you would assume the GST cut would make booze one per cent cheaper, that assumption would be wrong. You see, the federal government will not allow us to enjoy cheaper booze because...well...who knows.

Check it:

As part of their election platform, the Conservatives promised to cut a percentage point off the GST.

But the government's May 2 budget raised excise taxes on tobacco and alcohol in what it called a revenue neutral exercise to maintain so-called "sin taxes" at existing levels.

"Budget 2006 proposes to increase alcohol excise duties to offset the impact of the GST rate reduction," said the budget document.

That's where things get tricky.

The tax on beer and wine is to be charged on a flat, per litre basis at the source, meaning the same tax rate applies to premium-priced ale as buck-a-beer lager.

But the excise tax on hard liquor is based on the retail price per bottle. And since provincial excise taxes - Alberta excepted - are set as a percentage of the federal excise tax, the provinces get a windfall.

I know it's only a few cents, but it's the principle.

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