- 52 per cent of the cost of wine
- 59 per cent of the cost of spirits
- 39 per cent of the cost of beer
An LCBO spokeswoman says those markups fund Ontario's social programs as well as the LCBO's operating costs.
"Profits are returned to the Government of Ontario by way of dividend and are used to fund provincial government priorities such as health care, education, and other important public services," Genevieve Tomney wrote in an email to CTV News.
Last year's $1.9 billion profit was the organization's "22nd consecutive dividend increase," she noted. "Our mark-up pricing structure is standard, transparent and a matter of public record. The pricing structure was established by LCBO with the Ministry of Finance several years ago."
'Crazy, crazy tax'
That kind of markup has convinced some producers to turn away from the LCBO (though many also note their production is too small anyway to handle the LCBO's massive orders). It's also led theToronto Distillery Co. to challenge the AGCO's power
to collect taxes, arguing the province doesn't technically have a tax on spirits. The owners hope it forces the government to change its regulations.
"When we sell a bottle out of our retail store, we do all of the work, and on a $40 bottle we have to pay them about $18. I mean, that's a crazy, crazy tax," said Charles Benoit, co-founder of the distillery.
The markup, Benoit points out, was designed to cover the LCBO's distribution and retail costs, as well as provide the province its dividend (the LCBO pays a 13 per cent commission on sales from the distilleries - after taking the standard markup. A recent report commissioned by Ontario Premier Kathleen Wynne
recommended raising that.).
"Fair enough," he said. "But when you apply it to our store, they're not doing any work of distribution or retail. Then it's pure tax... and it becomes an outrageous tax."
So far, the Ontario court has disagreed, giving the win to the AGCO and the LCBO. Benoit and his business partner, Jesse Razaqpur, are appealing that decision, with their next court date likely by the end of the year.