By Patrick Flanagan
One of the few priorities that Doug Ford addressed during our recent election campaign was the price of beer. A regulation under the provincial Liquor Control Act sets minimum prices for various alcoholic beverages, including beer. Ford promised to reduce the minimum beer price, and he has made good on that promise. Starting later this month, brewers will be allowed to sell their product for as little as $1.00 per bottle (plus the deposit). So those of you who voted for Ford will be able to toast him on Labour Day weekend with a buck-a-beer bottle in your hand.
Or will you?
Let’s look at current beer prices. Most of the beer sold in Ontario comes from the three big brewing companies, and their best-selling brands cost $37.50 for a case of 24 bottles. However, the Beer Store website lists about 60 brands under the “value” category. Almost all of them sell for $35.50 for 24 bottles, though a few are a bit higher or a bit lower. All sell for more than the currently permitted minimum price, which brings into question why a lower minimum would have any effect?
The prices quoted above include the bottle deposit, which is 10 cents per bottle or $2.40 per case. Also included in the price are a federal excise tax, a provincial beer basic tax and a provincial beer volume tax, all of which are based on volume, not price. There has been no talk of lowering any of those taxes. In fact, they are increased from time to time to reflect inflation, automatically in the case of the provincial beer basic tax, which will rise on November 1 by 25 cents per case of 24. The price also includes, of course, the HST, which would go down if the price were lowered.
For a typical value beer sold by a big brewer for $35.50, here is the price breakdown currently and if the price were reduced to $26.40 (i.e. $24.00 plus the deposit):
So a brewer that accepts Ford’s challenge to bring back buck-a-beer would see its revenue per case drop by 45 per cent (i.e. from $17.86 to $9.81). It’s no mystery as to why has the beer industry has not enthusiastically endorsed this change.
I am not a political pundit, but I see great potential for similar vote-getting proposals in the next election. How about a minimum gasoline price of 50 cents per litre, or a minimum price of $5,000 for a new Cadillac? The possibilities are endless.
Patrick Flanagan is a retired actuary, currently enjoying life in the Huntsville area.
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Well, since Ford has done something for beer drinkers…. how about getting us a good $10 bottle of Ontario wine?
Right On. The price of beer is really a non-issue when considering the many more important issues that need attention in this Province. But considering the lack of platform that the Ford gang have on all important issues I guess some supporters would consider the price of beer as an important issue that got looked after.
Expecting many more meaningless edicts from the Ford Gang.
The first thing I said was ok so he makes beer a dollar then does he donate the rest of the normal cost to the women’s shelters who will end up taking the brunt of it? He’s been in office not quite 2 months and has made a mess for the lower income people already .
This is straightforward pandering to average Joe voters, not to mention the all-too-sizeable demographic that needs meetings.
I personally detest beer so I wouldn’t care if it sold for $100 a bottle. But, I suppose it demonstrates Ford’s commitment to the “little people” as it should help the local craft brewers somewhat.
A better plan would have worked to make food and housing more affordable. Housing would become more affordable if the enormous development fees were lowered. The Provincial Development Charges Act (1997) permits municipalities to pass on the cost of new development solely onto developers and builders–which, of course, passes this on as part of the cost of a new home (some development fees result in over $63,000 per new home in a specific municipality). The bodies which oversee those assessments are replete with many well-paid layers of bureaucracy and lots of highly paid consultants. If development fees were reduced significantly, the price of housing would likely come down through increased competition. Only the biggest builders are able to foot the enormous development fees charged in some municipalities. This essentially eliminates the small builders from operating in those municipalities and raises the cost of housing because of a loss of competition.
It is true that small craft brewers pay a lower rate of beer basic tax, but their other costs are usually much higher. The big brewers can achieve economies of scale by standardizing their product and producing gazillions of litres. Even with the lower tax, most craft beers have a higher price than the high-volume beers. That is why I didn’t mention craft brewers.
Perhaps an enterprising craft brewer will bring out a buck-a-beer, as a way of gaining publicity and/or supporting the Premier. But it would have to be a short-term deal, as they would lose money on every bottle they sold.
The fact remains that all beer in Ontario has been selling for more than the current minimum, so a reduction in the minimum is meaningless. Perhaps Ford is hoping that people will embrace the slogan, and ignore the reality that his policy does nothing to lower the price of beer.
The price of beer has everything to do with governing the Province. Those with money can easily pay the exorbitant amount of tax placed on beer, alcohol and many other items under government control. Soon there will be cheap drugs on the market to compete with beer producers. Mr. Flanagan didn’t bother to mention that craft breweries don’t pay that volume tax in his formula. Thus the huge rise in Craft Breweries, because these are localized they have less transportation costs, less taxes and therefore should be able to provide product at less cost than the big boys. It is a very small item, beer, but it sends a message to those less fortunate that their votes and their wants and needs are just as important to their government as more wealthy people. It gives hope and a reason for them to cast their ballot at the next election.
Ridiculous! I understood that this was intended as a boon to the craft beer industry. The problem, however, is that they count on charging a small premium usually; to reflect the quality or uniqueness of their product.
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And what about the alcoholic, who usually subsists on cheap wine or mouthwash/shaving lotion/cough medicine? He/she can now readily panhandle enough “spare change” for a 12-pack at a minimum. Similarly, adolescents or twenty-somethings will be tempted to over-imbibe. The former group will eventually be a drain on the province’s scarce medical resources: the latter will experience an increase in automobile accidents.
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I can’t believe that even the staunchest Tory voters expected Mr. Ford to prioritize so many ancillary and worthless objectives.
I cannot see how the price of beer has anything to do with governing the province. Healthcare, education, infrastructure, the environment, climate control, equality, those are the areas for government focus. Not cheering.