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This is a response to Mr. Black’s editorials of January 14 & 21 2017 in the Chronicle Herald.
Mr. Black just published a two-part article called “Drinking local” where he discusses the impact of the success of local wineries and brewers. It is good news all around, thriving local business, jobs, interesting products and a good impact on tourism. Except it is bad for government. Since the NSLC is a monopoly it decides how much profit various participants receive. Local producers get a greater share of the profit when sold in NSLC stores compared to none-local producers.
Mr. Black correctly states the NSLC is essentially a taxation scheme whose only aim is to “achieve a revenue goal”. He defends the extortionist prices charged as how we get ‘free’ medical care (which is inaccurate – the NSLC provides less than 3% of government revenues and medical care is not free). Successful local producers hurt the profit margins of the NSLC so something needs to be done. Unfortunately, Mr. Black’s solution is wrong. Rather than take issue with the irresponsible and unsustainable government spending forcing the issue he capitulates to the status-quo and suggests successful local producers should pay more.
The real solution is for government to be cut back to fiscal sustainability, taxes and costs lowered, stop all subsidies and get rid of the NSLC and other barriers holding business back.
Jonathan Dean | January 23, 2017 | Reply
Kevin Cox’s rebuttal of your column was in my view not a rebuttal since it ignores the subsidy issue of the reduced markup completely. Either
he did not understand that his industry receives this subsidy or he intentionally wanted to mislead people. Focusing on the dispute over what the NSLC charged as a fee for sales from their own stores is a flea in this discussion. And no one disputes that the industry is important, fun and growing. It is also subsidized by receiving 28 per cent of all NSLC listings for beer while only generating 4 per cent of sales. It is irrelevant how much this 4 per cent is growing, it is minuscule in overall sales. A competitive retail environment, and he seems to forget that the NSLC is a retail business with a legislated commercial mandate, would never allocated 28 percent of listings to 4
percent of sales. It would quickly go out of business.
I could go on because the industry does not seem to understand what a subsidy is. Same for the wine industry. Do readers think the NSLC gives local vintners 70 percent reduction in markup because they are stupid business people? They give it under the policy of “… Developing wine regions” which no other developing geography other than NS receives. This gives local producers a larger margin so they can reinvest in their businesses and frankly price more competitively to large producers on the shelf since they lack the same economies of scale. The same for craft beer. It is a subsidy and was the point of a WTO trade case with regard to the LCBO doing a similar thing. Ontario lost at the WTO and the LCBO had to end it. So now Ontario
subsidizes wineries directly through agricultural programs thus avoiding trade agreement breeches.
Rick Perkins | January 22, 2017 | Reply
The political class subsidize to ‘encourage’ more employment – a value judgment they feel is proper . Whether it is ‘tax-fair’ lies with the trustingness of the majority . Any sort of tax-neutrality logic has nothing to do with the increased employment ‘feel-good’.
Deeper on subsidies: what was it that Romney pointed out in a 2012 Florida speech during his attempt on the White House, which appeared to be so politically incorrect? Something “vastly higher than” 47% of the public paid in income tax … ? So, let’s not fuss too much over what Kirk Cox says are 400 rural jobs; let’s look more closely into why “one group of us does not pay its share”. That, it seems to me, has become the unsustainable subsidy in modern times .
Gordon a.... | January 21, 2017 | Reply
Agreed there should be transparency. However the argument you have made for the past two articles appears to advocate there should be no difference in taxing policy for this local industry. I think the reaction you received takes issue with that advocacy. We all know taxation policy and cash giveaways in Nova Scotia create discrepancies such that all are not created equal. Given that reality, readers are saying leave the little local guy alone, until the rest and usually larger issues are addressed.
Your characterization of favorable taxation policy as a subsidy is correct. But most people associate the word subsidy with cash giveaways. In that context I think your conclusion that “Apparently, this is profitable for them without subsidy” is interpreted differently by your readers. In order to prove or disprove this conclusion you have to understand the tax policies of all the entities you mention. Liquor in most provinces and states is cheaper that in Nova Scotia. Why is that- different tax policies. States like New Hampshire have no tax on these products— so is that a subsidy??? No. Does that mean these NS local producers can exist without a favorable tax treatment? I bit of a reach.
You are correct in comparing Nova Scotia tax policies and drawing conclusions regarding varying tax policies within the province. To extend that argument outside of the provincial boundary is not appropriate.
barry h | January 21, 2017 | Reply
Generally the prices of NS products in other provinces are the close to those in Nova Scotia. In those provinces the provincial liquor vendor is getting the same markup as on other products not produced in their province.
Bill | January 21, 2017 | Reply
Bill; your final para says it all; Thanks.
bobmackenzie | January 20, 2017 | Reply
The NSLC’s excessive markup on alcohol is a hidden tax, which makes hidden subsidies possible.
Bill Turpin | January 20, 2017 | Reply
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