British Columbia\’s PST will return as of April 1, 2013. The return of the PST also means the increase of certain taxes on wine. This is due to the fact that the PST has (and previously had) a higher tax rate on alcohol (10%) than on other products (7%). When the HST was introduced, the combined federal/provincial sales tax rate on alcohol went down from 15% to 12%. This would have created a small reduction in consumer prices … except that the government raised \”liquor board markup\” rates at the same time to eliminate any savings (for example, the rate on wine was increased from 117% to 123%). As of April 1, the liquor board markup rates will go back down and the sales tax will go back up. For the most part, consumer level retail prices should remain the same. However, there are a number of exceptions …
- Wine brought back by travellers from outside the country into BC will become slightly more expensive since the sales tax rate applied at the border will go up from 12% to 15% and the method of calculating it will become slightly disadvantageous.
- Wine purchased direct from BC wineries will also be subject to a higher tax rate because liquor board markup is not applied to those sales. However, it has been typical in BC for wineries to advertise \”tax included\” prices in the past rather than levying the sales tax separately. As a result, wineries may choose to absorb the sales tax increase and keep the prices the same … or they may choose to increase prices.
- Wine purchased in restaurants/hotels/bars will also be subject to a higher tax rate for consumers because the combined sales tax rate on those purchases will go up from 12% to 15%. The price charged to the restaurant may go down slightly due to the reduction in liquor board markups and the return of a provincial sales tax discount (hopefully). However, if restaurants do not re-price their wine lists then the end price for consumers will rise.