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British Columbia has a bizarre system of retail distribution for wine which detrimentally affects consumer choice through high retail pricing, excessive taxation and limited availability. This article outines how BC wine lovers can pay less tax on wine and get better selection.

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For Imported Wine: Save By Shopping Elsewhere

Unfortunately, the best way to avoid BC's absurdly high prices on imported wine is to shop outside the province. If you buy wine in either of our neighbouring jurisdictions, you will save large amounts of your hard-earned money.  Prices in WA state to the south of us are often half what they are here and prices in AB to the east are often about 25% less. The differences in Alberta tend to be greater on more expensive wine. It is perfectly legal for BC residents to purchase wine in the United States or Alberta. However, you will face two problems following your purchase if you want to avoid the application of BC's excessive taxes: 1) the wine will have to be delivered to the location which has lower taxes, and 2) once the wine is delivered to that location, you may have issues if you want to get it back to BC so that you can drink it here. We will post another article on strategies to deal with these issues shortly. In the mean time, you can also save on taxes even within BC if you follow the tips in the next section.

For Both BC and Imported Wine: Save By Shopping Smarter in BC

Did you know that there are a dizzying array of retail channels and that the pricing structure and tax rates for wine sold in the different stores varies considerably depending upon what type of wine you are buying and what type of store you are buying it in?

In most jurisdictions, there is one type of retail wine store license. However, here in B.C., we have the following different retail channels: B.C. Government liquor stores ("BCL Stores"), rural agency stores, wineries, independent "old license" private stores ("Private Wine Stores"), licensee "new" private stores ("Licensee Retail Stores" or LRS stores), and VQA private stores ("VQA Private Store"). Confusing, isn't it?

Now here's the interesting part. As a result of odd policy choices in Victoria, the pricing structure and taxation structure is not the same within the different channels. As a result, if you're inclined to spend less when possible and to pay less tax when possible, read on ...

While the wholesale price of wines is controlled by the LDB, the retail price will vary from store to store not because of competition but because of differing wholesale discount rates in the various channels. For example, rural agency stores get only a 10% discount off government retail price but are required to charge close to the same retail price as the BCL Stores. Licensee Retail Stores get a 16% discount but can and usually do charge more than BCL Stores. Private Wine Stores get a 30% discount. VQA Stores operate slightly differently but the profit margin is close to the 30% wholesale discount that Private Wine Stores get.

The tax rates on wine in B.C. are misleading because there are large amounts of hidden taxes concealed in the markups and fees applied to wine by the LDB. For example, if you buy a bottle of moderately priced imported wine from a BCL Store, you will pay 12% HST, 123% LDB markup and some other lesser fees such as bottle charges. The total: an impressive 135% take for the government (almost all of which goes to the provincial government). Nearly all of the LDB markup is really hidden tax because everything beyond the LDB's operating costs goes directly into general government revenue in Victoria. As a result, if you buy imported wine at a BCL Store, you are paying an exceptionally high rate of total tax/markup.

On the other end of the spectrum, if you buy a bottle of B.C. wine either directly from the winery or from a private store, you will pay only 12% tax because there is no LDB markup applied within these channels.

In regards to all purchases, you should be aware that even though the price may be the same in two different stores (for example, as between a BCL Store and a VQA Private Store), the amount of total tax/markup going to the government may be markedly different. In the VQA Private Store, more of the purchase price will flow to the winery and retailer while in the BCL Store, more of the price that you pay will go to the government. As a result, while you may not pay much less for your wine, you will pay much less tax (and send more money to the winery and retailer) if you follow the suggestions below.

Here's a quick summary of where your money goes within the various channels if you buy a $15 bottle of wine.

For imported wine:

Highest total taxes/markups are in BCL Stores. Lowest are in Private Wine Stores. Prices will generally be lowest in BCL Stores and some Private Wine Stores, highest in Licensee Retail Stores.

Example stores where you will pay less tax:

Private Wine Stores: Marquis Wine Cellars (Vancouver), Liberty Wine Merchants (Vancouver), Kitsilano Wine Cellar (Vancouver), Dundarave Wine Cellar (West Vancouver), Everything Wine (North Vancouver), Everything Wine (Victoria/Langford)

For B.C. wine:

Lowest total taxes/markups are through the winery or any of the private stores. Highest are in BCL Stores. Prices will generally be lowest direct from the winery, in VQA stores or in BCL Stores.

Example stores where you will pay less tax:

Direct from the Winery or through VQA Private Stores

Private Wine Stores: Marquis Wine Cellars (Vancouver), Liberty Wine Merchants (Vancouver), Kitsilano Wine Cellar (Vancouver), Dundarave Wine Cellar (West Vancouver), Everything Wine (North Vancouver), Everything Wine (Victoria/Langford)

So the end result is that if you are concerned about both prices and taxes, you should buy your imported wine from Private Wine Stores and your BC wine from either the winery or any of the private stores. If you are feeling frugal (and who isn't these days), you might also consider that the LDB markup actually decreases as the value of the wine goes up so the less you spend, the more tax you pay percentage-wise. As you spend more, there is less LDB markup and a lower percentage of total tax. So if you're feeling like lodging a tax protest, splurge on a more expensive bottle!