WHYTE & MACKAY SPECIAL—If you have to pay sin tax, pay it on something cheap

My parents are refusing to buy any more booze. It’s too expensive and—if you believe the dire predictions about the upcoming privatization of BC Liquor Stores—it’s going to get more expensive. I don’t know what’s cooking in my parents’ heads right now…they’re planning a change of headquarters…they’re doing budgets—all painfully boring and seemingly designed to torture yours truly.

Why is alcohol so expensive in Canada?

Seriously! A 750mL bottle of JOHNNIE WALKER BLACK LABEL is $49.99 in Canada versus $34.95 in the US. With our dollar just a couple of cents off par, what could explain this massive difference?

The answer is excise tax, imposed in Canada on goods such as tobacco, alcohol, gasoline, and vehicle air conditioners. Also known as sin tax, excise tax operates in theory as a disincentive to use harmful products, even though these products are often labeled inelastic precisely because imposition of tax (or any other variable) has little effect on net consumption.

Huh?

Essentially, the argument goes, people smoke, drink, drive, and cool themselves as per their own ideologies and lifestyle choices. Increasing or decreasing tax on these choices does not markedly change them; studies show that people continue to consume what they consume—they just bitch more about the prices.

But does this mean excise tax serves only as a penalty for “sin”?

Not according to the prevailing wisdom on excise tax—that higher prices deter consumption while (circuitously) offsetting associated health costs.

It’s hard to pin down the correct assumption. Would hardcore smokers smoke four packs a day instead of two if the price were cut? What margin of society would stay constantly drunk if booze were cheap? Given people’s jobs and obligations—not to mention public proscriptions against public smoking and drinking and social pressures to at least approximate a healthy lifestyle—it’s hard to imagine that, at least for the majority of people, tax cuts would launch them toward debauchery. Not everyone is as thoroughly lacking in judgment as your host here.

Arguments in favor generally fall into three categories:

  • Moral. Excise tax gives pause to people who would otherwise show no restraint. But can you derive good, “moral” behavior through monetary means? Is the tax a disincentive or a punishment?
  • Medical. Forty-five thousand Canadians die from smoking each year. Alcohol-related costs are harder to isolate, however. A glass of merlot with dinner is heart-healthy; a box of merlot is not. The healthy “sweet spot” lies somewhere on the continuum between. How can it be defined without Big Brother’s assistance? Surely, if one glass is healthy, that glass should be subsidized, not taxed…
  • Financial. Especially in countries with tax-funded healthcare, smokers and drinkers burden society with their treatment costs and should therefore pay taxes on the products that eventuate in their ailments. Or should they? According to a Dutch study, overall lifetime health expenditure is highest among healthy-living individuals, precisely because they live longer, whereas their smoking and/or obese counterparts check out earlier, relieving the medical system. Wow!

Photo: CBC

But conclusions from a study conducted in the Netherlands don’t necessarily make the leap to Canada. More relaxed attitudes toward alcohol, reduced emphasis on driving, and a greater acceptance of socialized medicine contrast glaringly with Canada’s moralistic attitudes on alcohol. Whereas alcohol is a casual element of European dining that extends to teenagers, in Canada and the US, alcohol gets built up to Holy Grail status, leading teenagers to binge-drink at the first opportunity. All-or-nothing morality guides prohibitions on youthful drinking (dry grad, anyone?), leading to adolescent obsessions with alcohol (“I’m gonna get so wasted”) as opposed to healthful incorporation of alcohol as a life skill. So when doctors write in the Canadian Medical Journal that alcohol costs Canadians $3.3 billion in annual health costs, they’re not joking. But is the solution to tax the shit out of alcohol, or is it to educate people on how to use alcohol safely?

Admittedly it’s too late for me, my fellow inebriates. For now I take refuge in cheap finds such as WHYTE & MACKAY SPECIAL BLENDED SCOTCH WHISKY. At $25 for a 750mL bottle you really can’t do better—at least not in Canada. THE DALMORE SINGLE HIGHLAND MALT is the primary backbone, blended with some well-judged mystery whiskies, and treated with double cask maturation. Generous and malty on the nose, WHYTE & MACKAY is a lovely amber and offers rich malt and sherry on the palate, tapering from sweet to dry and lingering pleasantly. There’s no smoke to speak of and little complexity—but there’s nothing offensive either. This is an excellent rocks Scotch—an easy, undemanding sipper for when you want a wee dram without feeling too extravagant.

Liquidity support? Support these liquids, Harper

My Fellow Inebriates,

CBC reported today that during the recession Canadian banks received $114 billion in bail-out money.

Prime Minister Stephen Harper using a kitten to elicit your empathy—the way I'll get page views by tagging this post "cute pictures of kittens."

Of course we don’t call it “bail-out money” in Canada. We call it “liquidity support,” and it amounted to $3,400 for every man, woman, and child in Canada. Whereas 436 U.S. banks went under during the recession, liquidity support kept all of Canada’s lending institutions out of the shit, supplying—at times—more than 150% of those institutions’ worth.

Getting to the bottom of these numbers will take more than the efforts of a drunken bear.

Despite applications for full disclosure under the Freedom of Information Act, the Bank of Canada refuses to release its accounting. Details of today’s report came from the U.S. Federal Reserve, which publicly released data on a U.S. program into which Canadian banks had dipped (in addition to taking their Canadian handout)—Canadian banks that ultimately posted combined profits of $27 billion when all was said and done.

Gimme that beer.

Meanwhile, little knowing how far underwater Canadian banks had sunk, we all continued to pay usurious credit card interest, got bilked on monthly “service” charges at institutions where the so-called services had long since been fully automated, saw the removal of services in return for said service charges, endured who knows how many dinner-time insurance sales calls, and—for the privilege of taking out a mortgage with one of these stable lenders—ponied up $20K in insurance money to insure not our risk but the bank’s. Oh yeah.

If the kids asked what a “bank” was we’d say it was a place to save money—a place where your money is safer than it would be under the mattress. Canadians often crow about the safety of their banking, but as it turns out, we pay dearly for that security.

So to you, Stephen Harper, with your selectively socialist impulse, bite me. I want my $3,400 back. I have a bar to stock, and you’ll be getting my shopping list.

Lucky me, I have a conservative MP to whom I can address my concerns.