Thank you, Mr. Speaker. Earlier today I raised the concern of the overbearing micro-brewery tax system being imposed on our brew pub manufacturing starting up in Yellowknife. When one should be supporting this entrepreneurial start-up business, the GNWT, even by cutting its rate by half, still has one of the highest micro-brewery sin taxes in all of Canada. Sadly, when production increases, many fear with the tax regime being proposed, this will do very little to enhance the true potential of this new industry.
I bud my questions today for the wiser Minister of Finance. There is no denying the huge tourism and employment potential of a northern micro-brewing industry.
Can the Minister indicate, has the department undertaken, or plan to undertake, any studies of tourism and employment of this new industry? Thank you.
Thank you, Mr. Dolynny. Mr. Miltenberger.
Thank you, Mr. Speaker. We need to look at this issue. I would suggest a broader perspective of why we have placed such a high cost on alcohol. Having spent a good number of years in social services, five and a half years as Health Minister, I can tell you it’s because the abuse of alcohol costs this government over $100 million a year, probably more if you add in all the costs related to hospitals and FASD children. We just approved in this House, I think about $11 million for residents down south, the majority of which, if you checked the case files, would have alcohol abuse in there somewhere.
So, we have deliberately placed the high price on some of the things that are causing the most trouble in our jurisdiction. Those two things are alcohol and tobacco. Northerners have a prodigious thirst and a fairly prodigious propensity to smoke or use tobacco, all of which we know, when they’re abused, can be deadly.
We have made a conscious decision for many, many years now to stick to that. It’s the same concept as a carbon tax. If you make the price high enough, it’s supposed to drive down consumption. It hasn’t quite worked yet, but it’s still something we see as a very, very big issue.
So in regards to this issue, we have offered up an incentive, as the Member has indicated, 50 percent, but the bottom line rationale is what’s the impact of alcohol on our society and our government and our coffers as a government, and it’s dramatic, and that’s why we are where we are. I’m not sure there would be the public will to start cutting taxes for alcohol. Thank you.
A very thorough response, but again, we’re trying to start a start-up company. While the admitted markup for beer produced in the NWT has been substantially reduced, as we indicated, it still stands out in significant contrast to lower rates for micro-breweries in every other Canadian jurisdiction.
Can the Minister indicate, what is the competitive advantage of having the highest micro-brewery tax rate in the country while trying to encourage business manufacturing, jobs, tourism potential and attracting what he has proposed, a 2,000 population growth? Thank you.
The direction that has been chosen by the government consistently over the many Assemblies that I’ve been here and prior is to see the need to try to control the abuse of alcohol. One of the ways we’ve chosen to do that is to put a tax on it that would be a disincentive to use, in addition to all the education and all the programs we have trying to work with communities for healthy babies and smart choices and active living.
So, we have two issues. The Member wants us to have a very modest tax regime to encourage the production of alcohol, and I’m saying I think we have a broader societal obligation and a governmental obligation, and that’s to try to manage the devastation that’s caused by alcohol abuse.
We do recognize the value of this type of business. We do provide some incentive. But if, once again, we’re going to make a decision to cut taxes on alcohol, we can’t just pick the micro-brewery. I would suggest we need to have a very broad policy discussion about what is our approach going to be across the board, because it would be a dramatic shift if that’s what we decide to do. Thank you.
Thank you, Mr. Speaker. As of December 2014, the GNWT updated their tax regime to a three-tiered system. This was allegedly to match the start of production of the new brewery. However, after speaking to the manufacturers myself, they feel that the 2,500 hectolitre maximum threshold would be met in no time and just when this company is considering market penetration to the South.
Can the Minister indicate how can our local manufacturer, a micro-brewery, expect to be competitive with southern micro-brewery producers when we have the highest energy costs of production in Canada, we have high transportation costs, and now we have the highest micro tax regime in the country?
If there is consistent will expressed by committee, SCOPP, for example, that we need to have a review of the tax rates on alcohol production, beer production, and if they make that clear to us, we will have a discussion about that. But I would suggest to the Member you can’t just pick a micro-brewery and talk about some kind of modified favourable tax rate. We would have to be prepared to talk about taxes on alcohol, what’s our position on alcohol, how do we want to manage the business piece along with dealing with the incredible social impact that we know exists in every one of our communities. In fact, the Member for the Sahtu just passed a private member’s bill to make sure that people in his region would have a say and a right to some direction being provided in terms of access to alcohol. This is a very, very important, sensitive subject, and I don’t think it would be good management, good government for us to talk specifically about let’s look at a specialized rate for micro-breweries.
Thank you, Mr. Miltenberger. Final, short supplementary, Mr. Dolynny.
Thank you, Mr. Speaker. I’m very much aware of the social impact of alcohol in the Northwest Territories. Sitting on the standing committee, I see all too well all the issues around the Northwest Territories. I believe that this is not impeding this. We’re talking about an industry. Cleary, this government has an opportunity to do the right thing and to re-evaluate this tax regime on micro-brewery manufacturing in the Northwest Territories.
Will the Minister commit to re-examining this tax regime and to bring our tax system with what is considered standard best practice for this type of small-scale brewery?
If this House represented by the Standing Committee on Priorities and Planning writes to us as a government, to me as the Minister of Finance saying that it is the will of this Legislature that we look at adjusting the prices of alcohol to be more favourable to the producers of the alcohol, then of course we will look at engaging in that discussion. But I would point out it will not just be focused on the business opportunity that may be provided by providing some kind of tax incentive to a micro-brewery, that I would suggest that it would become a much more fundamental policy discussion.
Thank you, Mr. Miltenberger. The Member for Frame Lake, Ms. Bisaro.
