News / Halifax

Halifax craft brewery suing NSLC over 'unconstitutional tax'

Unfiltered Brewing is taking the NSLC to court over a 50 cent per litre charge to craft breweries that netted the province more than $950,000 last year.

Unfiltered Brewing's logo.

Contributed

Unfiltered Brewing's logo.

A Halifax craft brewery is taking legal action over an “unconstitutional tax” charged by the Nova Scotia Liquor Corporation.

Unfiltered Brewing is suing the NSLC over its Retail Sales Mark-up Allocation (RSMA), a 50 cent per litre charge to craft breweries for beer sold in their own stores, private liquor stores and bars. The NSLC said breweries were charged more than $950,000 last year.

For Unfiltered, the charges amounted to about $24,000 in the first year of its existence.

“For a small place starting out, it’s quite a substantial number,” said Unfiltered partner Andrew Murphy in an interview on Monday.

If the brewery hadn’t had to pay that, Murphy said he might have been able to pay himself a salary – which he hadn’t done until recently – or the brewery could’ve expanded its capacity.

“I want the money back, and then I don’t want to pay it anymore,” Murphy said.

In May, Murphy heard from Richard Norman, a lawyer who told him he doesn’t think the charge is legal. Norman will go to court to argue the charge is unconstitutional because the legislature never gave the NSLC the power to charge a tax.

Murphy said he’d been trying to get the NSLC to explain why breweries like his have to pay the RSMA.

“When pressed for whatever information they have, a written policy, they provide essentially a statement saying, ‘You have to pay 50 cents a litre,’ ” he said.

“It’s a circular thing. I do not believe they have any justification.”

Asked for justification in an interview on Monday, the NSLC declined to elaborate.

“That will be part of the conversation as we respond to the application, but while the matter is before the court, we wouldn’t be able to provide further comment right now,” said spokesperson Denise Corra.

The case will be in court on Sept. 6 to set a date for a hearing.

Breweries have called for the RSMA to be reformed before, saying it’s unfair compared to the charge for wineries and distilleries.

Nova Scotia wineries and distilleries pay five per cent of the wholesale price of their products – which the president of the Craft Brewers Association of Nova Scotia said is less than half of the 50 cents per litre breweries pay.

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