Nunavut legislators introduce bill to tax alcohol
Territory one of the few jurisdictions in Canada without a liquor tax
Customers at the Iqaluit beer and wine store could soon pay a tax on the store’s products if a new bill passes in the legislative assembly. (File photo)
Nunavut residents could face a tax on purchases of alcohol if a new bill passes in the legislative assembly.
The bill, called the Liquor Tax Act, was tabled May 24. Currently Nunavut is one of the only jursidictions without a tax on alcohol, either directly or through HST or PST.
The Government of Nunavut held consultations on the bill throughout the territory in the winter of 2020 and 2021, said Sean Clark, director of fiscal policy with Nunavut’s Department of Finance
He said the overarching message the GN heard then was that Nunavummiut want alcohol to be taxed.
“Alcohol imposes social harm, and the public deserves compensation,” Clark said.
The bill would put a tax on all alcohol sold and consumed in Nunavut, meaning consumers would pay a tax on alcohol as a percentage of a product’s retail price.
That tax would go back to the Nunavut government and would be used as MLAs see fit.
The amount of tax would vary depending on the product, but generally the higher the percentage of alcohol in a product, the higher the tax would be, Clark said.
The final rates won’t be determined until the bill passes in the assembly, but it could range between five and 25 per cent.
Tax on alcohol imported to the territory through permits would be collected by volume and applied to the cost of the permit itself.
The tax would not apply to personal home brew and import-exempt alcohol brought into the territory, which is alcohol below the legal limit needed for a permit.
The bill also outlines penalties for not paying the tax, including seizing alcohol, imposing fines ranging from $500 to $10,000, and imprisonment up to six months.
Clark said he hopes the bill would dissuade people from bootlegging in the territory, saying the tax could provide an administrative alternative to cracking down on bootlegging through policing.
The tax could also reduce alcohol consumption through higher prices, Clark said, while also warning people not to expect a dramatic change in behaviour right away if the bill is passed.
“We have to be clear and recognize that while we should keep our revenue ambitions in check, so too should we keep our consumption ambitions,” he said.
“This is not going to solve or transform the issue of excessive alcohol consumption overnight.”
A similar bill was introduced in October 2020, but it didn’t pass before the legislature was dissolved for the territorial election last year.
The Liquor Tax Act is expected to be studied during the current sitting of the legislative assembly, but if it passes it likely won’t be implemented until the fall.
The GN will be implementing an intelligent and progressive public policy initiative. Wow. I’m impressed! There is little doubt that imposing a tax on alcohol sales is the right thing for the territorial government to do. Sure, it is needed to pay for the “social harms” caused by alcohol, which most people think of as injuries resulting from violence, children neglected/abused, families going hungry and people on social assistance.
But, there is an equal or greater need for the tax to also help government afford the substantial health care costs associated with alcohol use and abuse which many of us overlook when thinking about this issue. Alcohol is a leading cause of many cancers, heart disease, diabetes and other sickness that puts a lot of strain on our health care system. Too often, we only focus on the damage it does to people emotionally and socially, while forgetting the destruction it can inflict on your physical health. The tax will help pay for those medical costs.
Good job GN!
Nunavut and NWT are the only jurisdictions in Canada that bill everyone who decides to work 2% of their pay. This is thousands of dollars for ever individual. This policy comes from the 1990’s or earlier, in an era before remote work capabilities that exist. It is poor for employee retention to require them to pay 2% of the wages in payroll tax and the GN should revisit this policy as it makes Nunavut uncompetitive in securing a viable work force, both those who move here and those who work from outside the boundaries.
In Canada you pay income tax to the province and territory where you reside. This means all “fly in fly out” workers who earn money – lots of it! – working in Nunavut actually pay income taxes to their home province or territory (Ontario, Alberta, Quebec, etc.), leaving little behind for wider society. To balance these income tax dollars flowing out the NWT and NU have the payroll tax. This takes a bit off the top regardless of where you call home. The GN then gives some of this back, kind of, to anyone who actually files their income tax in Nunavut through the Cost of Living Tax Credit. Nunavut has fairly low income tax rates otherwise. I also think these payroll taxes exist in other places, they are just called something different (Manitoba calls theirs a “Health and Post Secondary Education Tax Levy” but it seems to be basically the same thing).
If you do not fly in and out of Nunavut doing construction and say work as a consultant providing advice to a Nunavut business or to government in contract you are dinged 2%. You then pay your resident income tax. Nunavut needs to keep its hands in its pockets. Yes it has low rates for residents, but I’m not a resident and I’m being dinged this toll for my computer to do Nunavut work. I don’t use Nunavut services or impose on its infrastructure. This is a money grab pure and simple and just means that Nunavut businesses are gonna pay the difference to me when the next contract comes up. Nunavummuit lose and it means more expensive services. Do you really see value from the GN for taxes collected? Lol you haven’t work for them if you think it is spent wisely. They are afforded basically all its budget from the southern federal government.
Alcohol will be consumed at they same rate as always. They say for alcoholics that its a desease so upping the price with taxes will not deter people from buying. 25% more for alcohol is 25% less food on the family table for some. Same as cigarettes. They say its to deter but it’s just greed and more money
Price elasticity is the economic concept of how a change in price of a product affects demand for a product. Alcohol, like other addictive products, is very inelastic, meaning that even if the price doubles, demand should stay constant. Bootleggers are the perfect example of this concept, as they can charge 5 or 10x the cost of the alcohol and people will still buy it. This will not deter people from buying alcohol and any right minded person can see through the smoke.
Really? Whoever thinks higher prices will prevent consumption clearly has zero understanding of how addiction works. Bootlegging is the perfect example of this! Let’s see this for what it really is – a cash grab by the GN to make up for budget shortfalls and poor planning.
Fiscal policy? With the GN? What fiscal policy. Sounds like a freebie.
Tax them regardless of what people think. We pay taxes for food and other stuff. I thought they were already taxed. Imagine, objecting to taxing alcohol when we pay taxes on more useful things.
So we pay the Tax from the governments of the NWT Ottawa or Winnipeg plus the permit which is supposed to be the tax now add a new level of taxes. That just doesn’t seem fair. In the south the Governments buy from a distributer and then adds taxes and this becomes the sell price in the liquor stores. Now in Nunavut we add the permit plus the new taxes. Maybe the GN should go to the distributer and start from there. They might have to work things a bit different but it would be looking after there people in a fairer way, just adding and adding isn’t the right way.
“The overarching message the GN heard was people WANTED to be taxed..”?? Really?? So, People just love having the government take more money out of their pockets. Oh wait, let me give you my hard earned money Mr. Premier!
I “like” the line at the beginning (Territory one of the few jurisdictions in Canada without a liquor tax)
We are without many things here including cheap groceries, slow internet, the cost of living but nothing is being done about any of that, the Nutrition North project does very little to help with high prices. Everywhere else in the world doesn’t need to sit and wait for webpages to load when trying to pay bills. The housing prices including gas prices are through the roof up here no matter what is going on in the south. We are going without many things up here in the north that the south doesn’t think twice about. If you think taxing alcohol will change anything for the good, you are clearly not living up here. Its a viscous circle when it comes to paying for Health Care when this place is depressing in itself. Its cold here 8 of the 12 months. Everyone here self medicates one way or another, some use beer, wine, many types of drugs etc.. Why not just lift the GST by 1% and it will cover all the taxes you want and won’t hit everyone so hard that has an addiction.
Sorry I’m just tired of things getting worse instead of better up here, we live about 50 years in the past here but get charged like we are in the future.