Time to Exorcise Excise: The Perils of Cross Border 'Smuggling' in Canada

Time to Exorcise Excise: The Perils of Cross Border ‘Smuggling’ in Canada

Amazing how a guy driving through the Rockies with a couple of boxes of wine in his trunk can get people so stirred up: All power to Terry DavidMulligan for single handedly bringing this issue to such prominence.

If you’re not familiar with the topic, you can read up on it in this excellent Wine Access srticle, or catch CBC’s in depth piece on this issue on today’s The Current

Only in Canada …

The real issue here is that the notion of cross-border carrying of tax-paid alcohol that’s actually personal property strikes at the very existence of the monopoly system.

Bureaucracy is always threatened by change, none more so than the still robust and lengthy rule of the various liquor control boards (their very names hark back to the prohibition era), who may offer platitudes about ‘finding solutions’ but, in reality, as monopolies, are going to be quite defensive even entering into such a discussion. Put it down to human nature. We all defend our turf …

One radical, yes, but perfectly sensible solution would be to make liquor taxation a purely federal responsibility. If that were the case we wouldn’t be having this discussion in the first place.

Of course, that’s not likely to happen—although it would make absolute sense.

The point is you can tax alcohol (as most ‘normal’ countries do) at the point of entry (port), place of manufacture (winery / distillery) and retail and / or wholesale point of sale. The revenues (after the usual expenses of collection and enforcement) could be redistributed through a negotiated formula.

The supreme irony of this cross provincial border exercise is that the real elephant in the room (if you want to talk about serious lost revenues) is the apparent existence of a huge grey market—for which governments admit to having numbers but won’t discuss them publicly. And don’t even get us started on the untaxed aspects of the U-Vin biz, which has effectively contributed to BC having one of the highest taxed bottles of wine anywhere. But that’s for another day.

If we have Federal Government transfers to the provinces under the Canada Health Act for health care funding, would it be so hard to link those transfers to a solely federally collected alcohol tax?

Maybe that’s what we should be talking about here … separating ‘taxation’ from ‘distribution’.

It shouldn’t be that big a deal. But …

I’m going to put on my bullet proof vest now.

Lots more on this to come …

About the Author: Tim Pawsey

Tim has been covering the food and wine revolution for about 20 kilos. Count 15 kg alone thanks to the blossoming cuisine and wine culture of British Columbia, Canada. His awards include: BC Restaurant Assn. Hall of Fame, Okanagan Wine Festivals Harry McWatters Founder's Award, BC Wine Growers Industry Recognition Award, Vancouver International Wine Festival Spirited Industry Professional award. Tim’s hallmark is seeking out and recommending value wines from BC and around the world that offer quality at every level. He also scopes out noteworthy restaurants that live up to their promises—and often over deliver. For several decades Tim wrote columns in the Vancouver Courier and North Shore News. He currently contributes to several magazines, including BCLS Taste, Vitis and others. Tim is a frequent judge for wine competitions and was a founding judge of The BC Lieutenant Governor’s Awards for Excellence in Wine. He is frequently invited to judge at The BC Wine Awards, and others. Tim has traveled to taste in many of the world’s leading wine regions, across Europe, in North America, Argentina and Chile, Australia and New Zealand, and South Africa.