Ontario will hike beer tax, sell majority of Hydro One to fund infrastructure

Ed Clark tests his teleprompters before delivering the findings of the Premier’s Advisory Council on Government Assets in Toronto on Thursday, April 16, 2015. THE CANADIAN PRESS/Chris Young

Keith Leslie, The Canadian Press

TORONTO - Ontario’s “biggest shakeup” to beer sales since it repealed prohibition in 1927 includes a new tax on the beverage and allowing it to be sold in hundreds of grocery stores, Premier Kathleen Wynne said Thursday.

“When it comes to the sale of beer in Ontario, I’m here to announce that the status quo is over and that the days of monopoly are done,” Wynne said as she released a report by a panel she appointed to look at liquor sales and Crown assets.

The new tax — approximately 25 cents on a case of 24 — will be phased in over four years, and the government predicts it will raise $100 million dollars annually by 2019.

The government’s revised agreement with the foreign-owned Beer Store — which holds a near monopoly on beer sales in Ontario — includes a pledge by major brewers to cap prices on their most popular brands, which represent about 50 per cent of the market, until May 2017.

“One thing we do not want to see changed is our commitment to affordable prices,” said Wynne.

Ontario will also allow beer to be sold in 450 grocery stores, and will start a pilot project to sell 12-packs of beer in 10 Liquor Control Board stores, which could expand to about 60 LCBO stores.

The agreement also makes it easier for craft brewers to list their products in the Beer Store’s 447 retail outlets. It will also allow bars and restaurants to buy beer at the same price as consumers after years of being charged much higher prices, which the government said will benefit about 9,000 small licensees.

The Progressive Conservatives said the new beer tax was proof the Liberals’ intentions were not all about improving consumer access as claimed.

“It’s all about a cash grab to fuel the Wynne Liberals spending addiction,” said Opposition finance critic Vic Fedeli.

Modernizing beer sales was recommended by a government-appointed panel, headed by former TD Bank CEO Ed Clark, which also examined Crown assets such as the LCBO, Hydro One and Ontario Power Generation to find ways to squeeze out the maximum value to help fund the Liberals’ infrastructure plans.

It recommended the province sell up to 60 per cent of Hydro One, but not allow any one shareholder to own more than 10 per cent, so the government’s 40 per cent ownership gives it “de facto control” of the utility.

Clark said the province could generate about $9 billion from the Hydro One sale, with $5 billion of that going to pay the utility’s debt and $4 billion to fund infrastructure projects.

The opposition parties warn a sale of Hydro One will drive up electricity prices, but Clark predicted rates could actually go down with private investment and a more business-like approach at the utility.

“Injecting more capital and private sector discipline will almost certainly improve Hydro One’s business performance,” he said. “We believe that there will be a favourable impact on hydro rates over time.”

Hydro One Brampton will be merged with Enersource, PowerStream and Horizon Utilities to create the province’s second-largest local distribution company.

The Progressive Conservatives say they don’t trust the Liberals to put the money raised from a Hydro One sale to debt and infrastructure, and fear the Liberals will use it to pay down the $10.9-billion budget deficit.

Follow @CPnewsboy on Twitter

© The Canadian Press, 2015

Comment on this story