The Ontario government will be cutting wholesale prices on alcohol purchases from the LCBO starting Jan. 1.
Wholesale purchases from the LCBO will save businesses 20 per cent when compared to retail prices, according to the government. This change is expected to provide approximately $60 million in annual support to restaurants, bars, and other businesses.
In addition, curbside pickup of beer, wine, and cider from licensed grocery stores will be enabled, along with the freezing of the basic beer tax rate.
The tax rates are incremental amounts of tax added to beer sold in Ontario, which changes every year based on the Consumer Price Index. The basic beer tax rate was intended to mirror inflation next March, but will now be frozen until March 2023.
“We’ve committed to helping these businesses, and that’s exactly what we’re doing today,” said Peter Bethlenfalvy, Minister of Finance in a news release.
‘Nice to hear some good news from the province’
The hospitality industry has been one of the hardest hit by lockdown measures and restrictions since the start of the pandemic. For those working in the industry, the announcement comes as good news.
Mike Smith owns multiple restaurants in London, Ont., such as Joe Kool’s and Toboggan Brewing Company. He says this step was needed amidst the rising inflation costs and the aftermath of COVID-19 restrictions.
“It’s actually nice to get some good news from the province for once. Licensed premises in some cases pay more for beer than consumers, and then you need to have a place where it’s sold, employ people, and cover all your costs, so this is certainly welcome,” he said.
Tony Elenis, President and CEO of the Ontario Restaurants, Hotel, Motel Association (ORHMA) says he is thrilled to see the government adopting the approach his organization suggested.
“The industry has been hurting and devastated, it’s not just about the revenues, but it’s also about the expenses, we’ve seen increases in all types of costs, and need a sustainable model to move forward for this industry to survive,” he said.
Elenis says he’s been receiving a lot of positive responses from numerous businesses who believe this price reduction is a strong tool in order to see tangible results in both pandemic recovery, and beyond.
‘A long, painful road to recovery’
Elenis believes that in the present economic climate, the last thing that’s needed is for prices to rise and the pandemic uncertainty just adds to that stress.
“We don’t know when this will be over, we need all the help we can get, this industry has a long road, painful to go in order to recover,” he said.
The issue of wholesale beverage pricing has been a top priority for ORHMA even prior to the pandemic, which led them to help the government adopt retail price reductions.
“How can a licensed industry, which buys so much in volume, pay the same price as a consumer…everything else this industry buys, gets a discount, except beverage alcohol prices, it’s unheard of,” said Elenis.
“I don’t think this will help too much with inflation and rising food and labour costs, it isn’t the answer to all the problems, but it certainly helps out,” said Smith.
Elenis says the ORHMA applauds the government for stepping up and supporting the industry in a critical time such as this. “The priority right now is about keeping the restaurants open, it’s about survival.”
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