The Minister of Finance and President of Treasury Board, the Honourable Tom Marshall, introduced amendments to the Liquor Control Act in the House of Assembly to confirm the right to retain the liquor licensee levy previously collected by the province.

Minister Marshall said the liquor licensee levy came into effect in 1969 until it was eliminated by the Williams Government in 2006. The levy was essentially a price differential charged to licensed establishments when they acquired alcohol for resale. Prior to the elimination of the levy, licensees paid premiums between nine per cent and 12 per cent higher than retail purchasers.

Minister Marshall said a similar levy imposed in New Brunswick was held by the Supreme Court of Canada to be an indirect tax, and therefore beyond the constitutional authority of a province.

"Essentially, the Supreme Court had ruled that the New Brunswick licensee levy was a tax, and that it was an indirect tax because the licensees passed that tax on to consumers who purchased alcohol in licensed establishments. In its decision, the Supreme Court of Canada held that the fact that these charges had been passed on to consumers was not a defence in the context of an unconstitutional tax, and provided for restitution for lounge owners. The Court did however allow for the possibility that constitutionally valid retroactive legislation could be enacted to deny recovery of the levy by licensees," said Minister Marshall.

The minister said subsequent to the Supreme Court of Canada decision, the provinces of New Brunswick and Nova Scotia implemented retroactive legislation to retain monies collected under liquor licensee levies.

"The amendment introduced in the House of Assembly follows the precedent set by the governments of New Brunswick and Nova Scotia and retroactively makes the fee increase or liquor licensee levy charged in this province from 1969 to 2006 a tax. It identifies licensees as agents to collect the tax, and deems them to have collected and paid over this tax, making it a constitutional direct tax," said Minister Marshall. "Following the Court�s logic, licensed establishments bore no financial loss, as the levy was passed on to consumers. Since licensees bore no financial loss, as a matter of public policy, there is no need to reimburse them, particularly as the money has been spent on programs and services for the people of the province."

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Media contact:
Bill Hickey
Director of Communications
Department of Finance
709-729-6830, 691-6390
billyhickey@gov.nl.ca

2008 04 09                                                  2:35 p.m.