P.E.I. clawing back liquor tax savings

Prices for beer, wine and liquor will not fall when the HST is introduced on April 1, and the Canadian Restaurant and Food Services Association is crying foul.

The government had been saying consumer prices will drop once the new tax comes in, as businesses pass along the savings they receive, in the form of tax credits.

But the P.E.I. Liquor Commission is not following that practice. With the introduction of the HST on April 1, the sales tax on alcoholic beverages will fall 1.5 per cent, but the price on the shelves will not change because the liquor commission will raise the base price to claw back the tax savings.

But Luc Erjavec of the Canadian Restaurant and Food Services Association said he doesn't think it's fair to increase the hidden markups and keep the price the same.

"It's a bit hypocritical on [the] government's part," Erjavec said.

Erjavec was also disappointed that the govermnent decided to raise taxes on small businesses to take back some of the money businesses saved with the introduction of the HST.