Why is liquor so expensive in Nova Scotia?

Why is liquor so expensive in Nova Scotia?

Eric Jackson

Last updated October 2023.

You don't need tell Nova Scotians that they pay too much for liquor. They already know.

At the time of writing, a 12-pack of Molson Canadian is $29.98, or $2.50 per can. A bottle of Apothic Red, one of the top-selling wines in Canada, is $21.99. Just south of the border in Vermont, the same bottle sells for $12.99 USD ($17.66 CAD), a difference of 20%.

Why such a difference? It's the result of a number of factors. Some are unavoidable, but others are the deliberate choice of the governing bodies in charge of alcohol manufacturing and sale here.

Bottom line: it's mostly taxes. 65% of the retail price of wine is due to taxes. 47% of the price of beer. Almost unbelievably, 80% of the price of spirits. Source.

Federal excise tax - manufacture and import

At the top of the chain is the federal excise tax. Beer, wine and spirits made in Canada (or imported into Canada) are subject to a per-litre tax at the time of manufacturing. "Per-litre" makes it sound like it's a flat tax, but it isn't: every year, the per-litre tax goes up automatically every year with inflation.

Provincial monopolies jack up the prices

In Canada, the federal government has delegated the responsibility of regulating the import and sale of liquor to the provinces. Most provinces (with the notable exception of Alberta) have established a provincial crown corporation that has a monopoly over the sale of liquor.

Here in Nova Scotia, the Nova Scotia Liquor Corporation is our crown monopoly. In 2002, the Province permitted the opening of four private liquor stores, all in Halifax, but has never allowed more since.

Since the Nova Scotian liquor market has almost no competition, we suffer with whatever high prices they choose to charge. Talk about perverse incentives! Not only does the NSLC keep prices artifically high in order to generate more money, it also purposefully keeps prices high so that Nova Scotians buy less alcohol, a scheme it calls "Social Reference Pricing".

And you can forget about interprovincial competition. In the infamous "Free the beer" case in 2018, the Supreme Court of Canada ruled that, despite the fact that the Canadian Constitution protects free trade within Canada, provinces are free to prevent Canadians from transporting alcohol over provincial borders anyway.

Economies of scale and geographic realities

In fairness, it's not all due to government policy decisions. Canada is a big country with a small population, which increases transportation and storage costs. This cost is more significant the farther you get from major urban centers and the United States border.

There is a solution for wine drinkers.

In 2013, Nova Scotia legalized on-premise winemaking. Under these new rules, urban wineries like Water'n'Wine Truro can produce small batches of wine for consumers, without having to charge all of the taxes and fees described in this article. The result is that wine drinkers are routinely saving 50% or more on their wine, while at the same time getting their wine customized to their tastes.

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