(Photo: Crown Royal Whisky)
A prominent importer responsible for 70% of all spirits sold in Ontario is raising alarms about a "punishing" tax bill that could reshape alcohol sales in the region.
On Friday, Spirits Canada issued a strongly worded news release targeted at the Liquor Control Board of Ontario. Spirits Canada alleges that the LCBO is attempting to retroactively claim taxes on spirits sold in 2023, following claims that Quebec's liquor board obtained identical products at lower prices.
The dispute hinges on a difference between local laws. While Quebec requires that spirits be sold at the lowest retail price, Ontario has long implemented mandatory minimum pricing that increases year-over-year. According to Spirits Canada, the LCBO is now applying Quebec's regulations to previously sold products.
Self-described as "the voice of the distilled spirits industry in Canada," the trade association represents heavy hitters including Bacardi, Diageo, Brown-Forman, Campari and Rémy Cointreau. Spirits Canada says the LCBO's actions will "unfairly squeeze" suppliers out of millions.
"Distillers and the LCBO have been long-standing partners on innovation, market growth, and charitable campaigns for many years," Lorena Patterson, senior vice president of public affairs and policy at Spirits Canada, said in a statement. "This partnership has helped support a healthy dividend to the Ontario taxpayer. This retroactive tax grab ignores our long history of collaboration and investment in the province, and the major impacts that all Ontario and other Canadian consumers could now face."
Shortly after the statement was released, the LCBO sent out a fact sheet refuting its claims point by point.
The LCBO says that consumers in Ontario pay up to $40 more for select products than in other Canadian markets. Rather than implementing a retroactive tax bill, the board claims that suppliers are being charged for not complying with established terms and conditions. While Spirits Canada framed the move as a money-making scheme, the LCBO asserts that the supplier is among 10% of non-compliant companies attempting to gouge consumers.
Until a resolution is reached, Spirits Canada is considering either raising prices or withdrawing brands from the market entirely.
“The suppliers are currently looking at all possible avenues, and nothing is off the table,” Patterson added.
