Fair treatment for Ontario licensees … it’s time!
(Sep. 11/09) As part of Ontario’s sales tax harmonization set to begin in July 2010, the province is reviewing all of the taxes currently applied to beverage alcohol. It’s essential that Premier McGuinty understands how the current system penalizes licensees – and it’s time that licensed operators received the fair treatment they deserve.
What CRFA is doing for youIn the coming weeks, CRFA will be meeting with key government contacts to ensure that licensee concerns are heard. To help us carry your voice to Queens Park, we ask that you complete our industry petition calling for no new mark-ups, the introduction of wholesale pricing and the elimination of the environmental levy.
Why it’s time for action on beverage alcohol- The average profit margin for a drinking place in Ontario is -0.3% – that means that they are losing money just by being in business! Since 2000, more than 283 bars, taverns, pubs, cocktail lounges and nightclubs have closed across the province. Adding any additional levies or mark-ups to our businesses will only make it harder for drinking places to stay in business.
- The threat of new levies or mark-ups is real. At present, customers now pay a 13% tax (8% PST plus 5% GST) on food from restaurants and pay a 15% tax (5% GST plus 10% liquor tax) on beverage alcohol purchased from licensees. Once the HST is introduced, these taxes will be reduced to one single tax at 13%, which means that the government will effectively lose 2% in revenue on alcohol sales at restaurants and bars.
The Ontario government may seek to recover this 2% through the addition of new levies or mark-ups – a move that would be revenue-neutral for government, but devastating for licensed operators whose negative profits will make higher menu prices an inevitability.
- Ontario’s bars and restaurants are LCBO’s single largest customer, yet they pay as much as – or more – for our liquor purchases than consumers do. Beyond not imposing additional new costs, it’s time for government to offer its licensed customers a true wholesale price, equal to the 10% discount given to LCBO agency stores.
- Wine and spirit containers are included in Ontario’s deposit-return program, yet licensees must pay an environmental levy of nearly nine cents per container, on top of the bottle deposits already paid on wine and spirits. As the single biggest non-residential supporters of the Bag-It-Back program, licensees contribute greatly to its success, and should not be charged this duplicate fee.