Government gouging negates a tax break

By Anthony Gismondi, Vancouver Sun May 21, 2010

VANCOUVER -- As a result of the new harmonized sales tax (HST) scheduled to begin July 1, the provincial liquor monopoly is facing a three-per-cent drop in annual revenue. It is basic math, really. The current taxes — 10 per cent PST and five per cent GST — yield three per cent more in revenue than the new 12 per cent HST will raise.Fear not, however — provincial finance officials have moved to prevent any wine prices from falling due to its HST being three-per-cent less. The B.C. Liquor Distribution Branch recently announced it will simply raise its wine markup levy, to an astounding 123 per cent from 117 per cent. In the case of hard liquor, the tax rises to 170 per cent from 163 per cent.The government has been quick to tout the price-falling properties of the HST, stating: “International studies show countries with value-added taxes, like the HST, have lower prices.” Yet somehow, it has decided that wine buyers should not benefit from any savings brought about by the HST. In fact, with new increases to its markup levy on wine (the 123-per-cent levy on wine is not considered a tax in Victoria) B.C. upholds its mantle as one of the most overtaxed liquor jurisdictions in the world.

I will not bore you with math but under the new taxes, a wine that costs $12 will sell for approximately $30. That is, $18 of that will be tax. Even though restaurants get an HST-adjusted price, they tend to double the shelf price of the wines they sell. So, $30 means $60 on the wine list before applying the 12-per-cent HST at the restaurant till. That doubles the government’s GST take to a nifty $7.20 and puts the final price of that $12 wine at approximately $67.

It does not end there.

Your food bill, likely around $60, will now be subjected to the 12 per cent HST for the first time, adding an extra $7.20 to the bill. Let’s round the total to $135, add a 20-per-cent tip, and your dinner for two is at $162. All for an ordinary meal and a single bottle of wine that arrives in British Columbia at $12.

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