Loss in taxes from new liquor regulations enough to make you sick

Dear editor,

The Yap report has recommended that liquor be sold in grocery stores.

Dear editor,

The Yap report has recommended that liquor be sold in grocery stores.

This policy will not be revenue neutral. It’s sickening that the BC Liberals will hand Jimmy Pattison and other grocery chain executives a gift of $100 million a year courtesy of the taxpayers.

I got this stunning number from the owner of the Denman Island General Store (he doesn’t advertise that he has a graduate degree in economics, which he studied in Australia, Canada, the USA and Japan).

The 2012/13 annual report of the Liquor Distribution Branch (LDB) shows that annual liquor sales in B.C. are about $3 billion, and it made a profit about $930 million from those sales (about 31.5-per-cent profit).

The report says that the LDB provides about $1 billion to the province’s revenues. Assuming that the grocery stores take 20 per cent of that $3 billion of liquor sales away from the BC Liquor Stores, they will sell $600 million, right?

If that $600 million worth was sold in BC Liquor Stores, the government would have made 31.5-per-cent profit on the $600  million. This equals $189 million.

But instead, the LDB will charge the grocery stores only 16 per cent of $600 million (or up to 30 per cent depending upon the model they adopt). That?s $96 million.

That is a $93-million shortfall to the provincial revenue stream.  ($189 million less $96 million = $93 million). Not hard math but he had to explain it to me several times!

There is a loss from taxes, too.

The grocery stores following the Alberta model (cheaper liquor!) will be discounting the price of liquor from B.C. liquor store prices by at least 10 per cent. The current provincial tax (social services tax) is 10 per cent.

If that $600 million worth of liquor were instead sold by BC Liquor Stores, the province would get $60 million in taxes.

However, by discounting 10 per cent, the grocery stores would be selling the same liquor for $540 million (10 per cent of $600 million = $60 million; $600 million less $60 million = $540 million).

That means the province would only be getting $54 million (10 per cent of $540 million = $54 million) in taxes. That is $6 million less than if the same liquor was sold in BC Liquor Stores. $6 million plus

$93 million = $99 million (roughly $100 million).

What does $100 million of government revenue do for us?

It’s equal to: 125 family doctors, (MSP average payments of $240,000 to general practitioners) = $30 million PLUS 220 teachers ($70,000 average annual salary each) = $15.4 million PLUS almost 50,000 hospital beds (average of $1,100 per bed/night per year) = $55 million.

Even if in the first year there is a five-per-cent drop in BC Government liquor store sales because of liquor being sold in grocery stores that is a $25 million hit to the BC government revenue stream (about 30 doctors PLUS 55 teachers PLUS roughly 15,000 hospital beds).

Enough to make you sick, right?

Graham Hayman,

Denman Island