My recent review of alcohol sales and government liquor tax revenue reveals some interesting points which may have implications for future liquor tax policy across Canada and elsewhere. Canada’s provincial governments have relied upon liquor revenue to contribute to their general operations since Prohibition. However, that reliability appears to be threatened as declining consumption and high prices are now resulting in falling levels of liquor revenue on a per capita basis in certain places.
Statistics Canada tracks the amount that government makes from liquor sales across Canada and provides continually updated data here, which can be segregated by year and by province. Here are the total liquor board contributions to government revenue for the most recently available 3 annual periods and for four select provinces. I have added “per capita” contributions to provide a point of reference comparison (I used general population, although I suppose it could arguably be more useful if this was limited to drinking age).
| BC | 2021/22 | 2022/23 | 2023/24 |
| Liquor Revenue | 1.193b | 1.193b | 1.130b |
| Per Capita Amount | 222.69 | 216.31 | 199.25 |
| AB | |||
| Liquor Revenue | 854m | 825m | 791m |
| Per Capita Amount | 189.23 | 175.94 | 161.13 |
| MB | |||
| Liquor Revenue | 322m | 327m | 323m |
| Per Capita Amount | 227.88 | 225.05 | 216.49 |
| ON | |||
| Liquor Revenue | 2.543b | 2.457b | 2.574b |
| Per Capita Amount | 167.79 | 157.17 | 159.43 |
There are some interesting takeaways that can be extracted from the above.
– Overall, annual government liquor revenues are fairly flat despite these years being fraught with inflationary pressure. But in AB, revenue is actually down by about 7%. The “per capita” amounts of government liquor revenue have also mostly decreased. In BC, revenue is down on a per capita basis about 10% over 2 years. In ON and MB, it’s down about 5%. But in AB, it’s down almost 15%.
– The above may explain AB’s recent introduction of a contentious “high value” percentage based wine tax … as an attempt to boost revenue. But this seems a particularly ham-handed way to do it as the most reliable way to increase revenue would be to increase the flat (volume-based) tax on all alcohol, not just target wine in a complicated way that makes the tax almost impossible to administer. My guess is that they will not increase revenue by the amounts that they want and will have to revisit this approach.
– The other provinces are likely worried about the fact that revenues are either flat or declining during a time of increased prices and increasing population. This does not augur well for liquor’s ability to “contribute” to government revenue, particularly if consumption continues to decline. As I noted in an earlier article, it may be time to re-think the policy behind liquor markups and consider changing how they are administered. Recent experience in the UK shows that significant increases to alcohol taxes can actually result in decreased government revenue in today’s complex consumer liquor marketplace.
– Manitoba, which is the only Canadian province, to have completely open borders for interprovincial DTC (direct to consumer) alcohol shipping, has the highest amount of per capita liquor revenue of all of these four provinces. This may be partially due to high MB liquor markups but, regardless, it confirms my belief that the DTC issue will not significantly affect provincial liquor revenue. Indeed, the province with the most open borders actually has the highest revenue!