Luke Harford, president of Beer Canada, says my argument that an inflation adjustment to the federal excise tax on beer is not a “tax hike” rests “on the assumption everyone’s paychecque increases by inflation” (“Not everyone’s paycheque keeps pace with inflation”) in his letter of Feb. 7. He asserts that “while this may be true for university professors … it certainly is not true for your average middle-class Canadian.”
Really? According to Statistics Canada, the average wage in Newfoundland and Labrador was $13.16 in 1997 and $24.91 in 2017, an increase of 89 per cent over those 20 years. Prices of goods and services rose by 47 per cent over the same period. Annually, wages grew by 1.2 per cent faster than inflation.
Mr. Harford writes that 55 per cent of the price of beer in New Brunswick is tax. (Apparently he has mistaken St. John’s for Saint John.) Skeptical about such claims, the federal tax being a maximum of only 15.9 cents per 500 mL bottle, I emailed Beer Canada on Jan. 30 asking for details. I am still waiting.
Whatever the true figure, there are good reasons for special taxes on alcohol. As with tobacco, higher prices reduce consumption. I enjoy a pint as much as anyone, but it’s a fact that alcohol remains a leading cause of injury and death, causing more hospital admissions than heart attacks do.
Professor of Economics,
University of New Brunswick, Saint John