Monday, May 24, 2010

BC Liberal government to raise mark-up on wine, liquor to eliminate price break for consumers from lower HST!

Thanks to the Harmonized Sales Tax - every bottle of wine in British Columbia should carry this label!

Did you know that the Harmonized Sales Tax would actually reduce the provincial tax on liquor - including wine - from 10% to 7%?

And did you know that the BC Liberal government will raise the provincial mark-up on liquor - including wine - to increase the price by that same 3% reduction in taxes?

That means that there will be no break for wine drinkers in BC - we are shafted yet again in a new way by the planned HST.

As I point out in a story in Saturday's Vancouver Sun by reporter Doug Ward, the government is telling consumers that businesses will reduce prices because of the benefits they will receive under the HST.

But when it comes to liquor prices, the government is doing exactly what consumers fear businesses will do - pocket the difference in lower taxes as profits.

The HST - a value added tax - will transfer $1.9 billion annually in taxes from businesses to consumers.

What it means is an additional 7% tax on a wide range of goods and services that were previously exempt from the provincial sales tax or PST.

That includes restaurant meals, haircuts, domestic airline tickets, consulting services, massage therapy and on and on.

You can see a longer list at the website of the group opposed to the HST - Fight HST - for details. Or check the incomplete list of goods and services the BC government posted 10 months after announcing the HST.

What might confuse some is that wine and liquor are taxed differently - the Vancouver Sun's excellent wine critic Anthony Gismondi has a very good explanation in his Saturday May 22 column.

The short version is that the current provincial 10% tax on liquor plus 5% GST will change to the HST as of July 1 - meaning the new tax would be the combined regular 7% provincial tax plus 5% GST for an HST of 12% - the same rate that would apply on all other goods and services.

The government would therefore lose 3% - unless it boosted the price through the "mark-up" it controls - the amount it increases before selling the wine to the public - and to private liquor stores.

The HST - it's enough to drive anyone to drink!