Research Paper on Why to End Provincial Alcohol Monopolies in Canada

Introduction

Some provinces have strict laws that prohibit the free trade of beer and spirits between the provinces in Canada. The Nova Scotia Liquor Corporation (NSLC), PEI Liquor Control Commission (PEILCC), Alcohol New Brunswick Liquor (ANBL) and Newfoundland Liquor Corporation (NLC) are the four top monopolies that control nearly all of liquor retail, wholesale and distribution in Atlantic Canada since the prohibition of the substances ended. These corporations bring in hundreds of millions of dollars to the provincial governments every year. The profit comes from customers who are charged above average prices. A recent poll indicates that Atlantic Canadians are dissatisfied with the status quo. This is due to high prices imposed by these provincial liquor monopolies. There are various problems that these monopolies pose such as high prices, lack of diversity and inefficiencies. Most people feel that the system inhibits market forces and therefore infringes free trade in Canada. This will try to answer this research question "Why to end provincial alcohol monopolies in Canada?" and offer solutions and recommendations

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The Issue

The Canadian provincial governments have dealt with the issue of allowing interprovincial trade of alcohol and other legal products in the country. The liquor monopolies restrict the amount of alcohol that can be brought across provincial borders. The provinces offer huge market advantages to domestic businesses, and therefore this makes the market unattractive to distillers outside the province or country. Consumers of alcohol desire to support local businesses but they are not able to do that due to restrictions. Consumers also want maximum choice; however, they do not know that alcohol monopolies are not treated the same. Policies that are in operation are meant to support the interest of in-province alcohol dealers at the disadvantage of the out-of-province producers. These policies hurt Canadian businesses. Most alcohol monopolies are non-competitive since they mostly require government assistance. Most producers do not desire to take their products outside their provinces since they make more money when they are in their provinces. The policies are used by alcohol monopolies to fight against any organization or government that tries to lobby for change. The trade fights are considered to be unstable, volatile and incredibly destructive. The existing trade restrictions and provincial subsidies are founded on protectionism. This situation makes it possible for alcohol producers to be taxed favorably compared to outside alcohol producers. Monopolies benefit from high prices that are charged to account for producer fees, liquor licenses and taxes, therefore, getting additional revenue. Consumers are against the current situation where the government controls them and the products that they can choose to consume. Global trade needs to be increased, and this can only be done by increasing interprovincial trade (Jantzi & McSweeney, 2019).

Consumers as well as out of province businesses suffer due to the protectionist regulations that exist in Canada. The consumer is compelled to pay very high prices to access the commodity, and there are a few choices of alcohol. The justification for the maintenance of strict controls by the provincial government is to protect consumers from health hazards, social costs, alcohol addiction, and economic efficiency. However, studies indicate that privatization has led to more expensive alcohol. It is illegal for a consumer to transport alcohol from one province to another making it impossible for customers to purchase legal products wherever they want. This situation limits the freedom of Canadians. According to the constitution, the law provides that Canadians can freely transport legal goods from one place to another. However, alcohol regulations have made it impossible for people to trade the commodity freely which violates the constitution (Canadian Press, 2017).

Trade is essential to the economic growth and success Favorable regulations would ensure that producers access the national market and therefore m0ove towards achieving financial stability in the industry. Privatization would ensure that small scale and large scale, producers, sellers, and distributors engage in trade thereby ensuring that many people benefit from the industry. This situation would allow consumers to purchase alcohol from any part of the country that they desire and transport it wherever they want just like any other legal product in the country. The situation would also ensure that the prices are balanced. Currently, the price of alcohol is very high due to taxes, fees and additional revenues for monopolies and the government. However, privatization would ensure that the forces of supply and demand are in place to regulate the prices to make alcohol affordable (Campanella and Flanagan, 2019).

Alcohol monopolies should end to allow the government collects more taxes from the business. Currently, the government collects its taxes from alcohol monopolies. In Quebec, it is estimated that the alcohol monopoly raises about 1 billion dollars in revenue. However, this amount can be grown if the sector is privatized. The government can also broaden its tax base since it would tax more businesses (Stockwell, Leng & Sturge, 2006).

The Complexity of Budgetary Choices

The government is faced with problems of making budgetary choices when it comes to alcohol monopolies. Alcohol is controlled by the government to curb its misuse and also control its prices. The Canadian government is forced to allocate resources to this sector so that it can operate as the law requires. The Canadian population has various areas that it desires the government to allocate money and therefore deal with the problems (Thompson et al., 2017). Healthcare, infrastructure, transport, security, food are so of the areas that matter to the lives of Canadians. The government has an insufficient amount of resources to cater to all these areas which makes it hard for it to make budgetary allocation choices when it comes to alcohol monopolies. Provincial alcohol monopolies should, therefore, end to allow the government to dedicate its resources to areas that are important to the population. Privatization of alcohol monopolies will allow the government to concentrate on other areas that require finances compared to the alcohol industry (Mariani & Pomarici, 2019).

Theoretical and Political Perspectives

There is a difficulty in handling the issue from different theoretical and political perspectives. Some people believe that the privatization of alcohol will lead to abuse of alcohol and increased social problems. The easy accessibility of alcohol throughout the country is expected to increase addiction among young people and also result in other activities such as the use of other drugs and substances. People who think this way are opposed to the idea of privatization since they think that it will lead to great problems if alcohol is not controlled. Those who support alcohol monopolies are about 15 percent of the population. However, the majority of Canadians believe that they should be allowed to order wine from any part of the country while 78 percent desire that they are allowed to order alcohol from any province (Kergommeaux, 2018).

Further, different political perspectives hinder a consensus from being reached. There are a group of politicians who support the continuity of alcohol monopolies because they benefit from the large revenues generated. Further, there are a lot of taxes the politicians get from these monopolies which allow them to deliver certain services and therefore some of them will not support the idea of the ban on alcohol monopolies. Some politicians are a desire that the alcohol monopolies end so that people can freely access alcohol just like any other legal commodity. They are against the idea where consumers are arrested and highly fined when they are caught moving alcohol from one province to another. According to this situation is against the constitution which gives people the freedom to move products from one part of the nation to another (Bower, 2018).

Retailers are capable of specializing in specific brands which may be considered of value. For instance, a shop could specialize in Australian wines only attracting customers who desire this brand. However, monopolies are not able to specialize since they stock a lot of different products that may be confusing to a customer to choose (Trolldal, 2005).

Solution

There is a need for Canadians to hold discussions about this issue. The discussions will be aimed at establishing the unique ideas of different stakeholders. The solution to the disagreement is to ensure that the different parties talk and therefore agree on the way forward. People have different opinions about the issue of alcohol monopolies in Canada. They need to come together and give their reasons to support their perspectives so that people can debate and agree on the best possible solution. The government, the alcohol monopolies and the citizens need to be involved in the discussions to ensure no one is left behind when these debates are held (Jantzi & McSweeney, 2019).

It is essential for consumers to access alcohol and other legal products efficiently and affordable. The government needs to allow the free movement of these products from one province to another. Laws need to be changed to allow the free movement of goods. There are strict laws that prohibit the distribution, sale, and storage of liquor from one province to another throughout Canada. These laws are a great hindrance to the end of provincial alcohol monopolies, and therefore there is a need to lobby to ensure they are changed (Corsinovi & Gaeta, 2019).

The government has to realize that this sector can generate more money if there is freedom in its sale and distribution since small business will be established creating avenues for increased taxes. The administration needs to increase its tax base to ensure that it obtains the taxes it requires to provide services to its people. Additionally, the government needs to concentrate on ensuring that the alcohol sold is safe for people to consume. It also needs to concentrate on ensuring that people get the right products (Weersink, Probyn-Smith & Von Massow, 2018).

The government can still control the sellers and distributors of alcohol by ensuring that those who produce, distribute and sell are licensed to ensure that when something goes wrong, they can be accountable for their actions. This situation will allow consumers to have a wide variety of alcohol and also they will be accessing it at an affordable cost.

The fact that alcohol is sold only by the monopolies does not mean that people do not access any amounts that they want and therefore the health effects risks are great when sold by private businesses or monopolies and therefore there is need to end the current commercial monopoly (Giesbrecht et al., 2013).

References

Bower, J. (2018). The Evolution of the UK Wine Market: From Niche to Mass-Market Appeal. Beverages, 4(4), 87.Campanella, D. and Flanagan, G. (2019). The Economic and Social Consequences of Liquor Privatization in Western Canada. Canadian Centre for Policy Alternatives.

Canadian Press. (2017). Canadians Want To Tear Down Provincial Barriers To Alcohol: Poll. HuffPost Canada. Retrieved 25 March 2019, from https://www.huffingtonpost.ca/2017/11/28/canadians-want-to-end-provincial-alcohol-monopolies-poll_a_23290117/

Corsinovi, P., & Gaeta, D. (2019). The European Wine Policies: Regulations and Strategies. In The Palgrave Handbook of Wine Industry Economics (pp. 265-290). Palgrave Macmillan, Cham.

Giesbrecht, N., W...