acton@ubc-ean.CDN (Donald Acton) (10/28/84)
While reading the Globe and Wail the other day I came across a rather
disturbing piece of information concerning the pricing of wine in Ontario.
This article states that there are three levels of provincal tax on wine based
on the wine's origin. I don't recall the exact figures but they are something
like the following.
1) 75% tax if the wine is from Ontario
2) 125% tax if the wine is from another province in Canada
3) 175% tax if the wine is from outside of Canada
I know that in BC that BC wines are taxed at a lower rate than wines
from out of the country but I don't know what the taxing policy is on other
provincal wines. The disturbing point in the above taxation scheme is that
other provincal wines are taxed differently than Ontario wine. ( Are the
wines from other parts of Canada and for that matter the rest of the world
so superior on a price/taste basis that the only way Ontario wines can compete
is to have foreign wines taxed out of reach?) Who benifits from a taxation
policy like the one described above? It certainly isn't the consumers since
if they prefer a non-Ontarionain wine they pay an extra premium. Is it the
Ontario wineries (sp?) and if it is the wineries why are consumers asked to
subsidize them? Is it the Ontario grape farmer? Such taxation schemes only
serve to give the impression that a certain industry is viable and competitive
when in fact it isn't. This taxation policy also invites retaliatory action
from other provincal governments so that even more consumers lose.
These government surtax/taxation schemes are unfortunately not limited
to the wine industry. I beleive that in Quebec a similar policy is followed
with respect to pork. A pig can be raised, slaughtered and shipped to Quebec
from Alberta more cheaply than if the pig had started its life in Quebec. But
the Quebec government does one of the following two things to support the pork
industry: (I am sorry I can't recall which it is)
1) It subsidizes directly the price of the grain (from western Canada)
used in the feeding of pigs.
2) It taxes non-Quebec pork such that Quebec pork is cheaper.
Once again the consumers are the losers since they pay for this either directly
each time they purchase pork or through their provincal taxes. In addition the
pork farmers of Alberta lose a substantail market and some of them probably
end up going bankrupt.
Surely individual provinces don't need to adopt taxation policies and
quotas that discriminate against fellow Canadians. There really isn't any
point to us being one country if we all act like independent nations.
Donald Acton
acton@ubc-eanchrisr@hcradm.UUCP (Chris Retterath) (10/30/84)
I find any mention of the pricing strategies for wine, liquor, and
beer in Ontario causes my blood pressure to rise. Not only does the
government make a bundle in taxes ($111 million last year), but it
also makes an enormus profit ($555 million/year) in markups!
Funny that all those so-called consumer advocates never get up in
arms about these profits. Must be that old protestant-English thing
about the sin of drinking.
Due to the low value of the Mark, and the wine gluts in Europe,
imported wine prices are lower; meanwhile local wines have been marked
up. Therefore, the price spreads are quite low now, although prices
themselves are still high. Personally I will now rather fork over the
extra buck or two and get the better quality imports; given the complaints
from the local growers, I am not the only one!
Funny how rigid governments and monopolies like to keep prices; they are
always ready to go up with inflation, but hate like the devil the thought
of lowering prices to keep up demand! Distilled liquor has gotten to the point
where its price is so high that demand has dropped off -- any economics
student could tell you that a monopoly can raise its prices only so high
before consumer resistance causes profits to (paradoxically) drop. Too bad
most of us forget our economics lessons after leaving school.
--
Chris Retterath
{decvax,utcsrgv,utzoo}!hcr!hcradm!chrisr
also available: ....!cygnus!chris