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SOMBA K'E/YELLOWKNIFE - One MLA is worried increases to so-called sin taxes will cut into profits for the hospitality industry, which could potentially affect their ability to retain workers.

Bob Ross, owner of Surly Bob's, said a 10 per cent mark-up on liquor taxes would most likely not cause him to raise his prices, although he said "every time there's a tax increase, it cuts into profits." The territorial government will mark-up liquor taxes by 10 per cent and raise the price of a carton of cigarettes by $11.20 on April 1, to generate an estimated $7.3 million next year. - Herb Mathisen/NNSL photo

On April 1, new tax measures introduced in Finance Minister Michael Miltenberger's budget will mark-up taxes on liquor by 10 per cent and raise the price of a carton of cigarettes by $11.20.

Great Slave MLA Glen Abernethy said even though he supported the idea of sin taxes, concerned bar, hotel and restaurant owners have told him they are worried about how the increases will affect them.

Abernethy gave voice to these concerns in the legislative assembly Feb. 26, stating that licensees who purchase liquor for resale already pay a five-per cent mark up when they buy liquor wholesale and the new tax will add an extra 10 per cent - thus cutting into profits.

In an interview, Abernethy said bars make up much of their profit from liquor sales and added businesses may have to pass extra costs onto customers. That, he said, could also adversely affect profits from food and non-alcoholic drink sales if the customer base shrinks.

"Some people are going to chose not to go out," he said.

"We want (these businesses) to exist because they do employ people," he continued, adding that in tough times, the government should do what it can to make businesses sustainable.

Bob Ross, owner of Surly Bob's, said while he didn't know all the details about the tax increases yet, it will probably not cause him to raise prices.

He was, however, certain they would affect his bottom-line.

"Every time there's a tax increase, it cuts into profits," he said.

He hadn't been contacted about the tax increase or heard anything other than the announcement in the budget, he said.

Ross said if the tax increase raised the cost of each bottle of beer significantly, he might have to think differently about raising costs.

"That's not something I want to do, but it's something I'll have to look at come April 1," he said.

Kyle Reid, general manager of the territorial government's liquor commission, said increases will not be that high.

He explained the 10 per cent increase is on the government's mark-up on liquor, which is just one component of liquor prices, alongside transportation costs and the original purchase price.

He said the price increase from the tax on one litre of spirits will be approximately $2.71 - which works out to around 7.5 cents per shot - 81 cents per litre of wine and 22 cents for a litre of beer.

A case of 12 bottles of beer will go up 90 cents, he said.

Abernethy said he'd like to see government consult with industry representatives.

"I'm more interested in having them meet with people in the hospitality industry and see what they say," he said.

He asked Miltenberger to meet the industry halfway, by looking into decreasing, or getting rid of the five per cent surcharge on wholesale liquor to offset the costs for licensees.

Miltenberger said the government will look into how that kind of decrease would decrease revenues. The government is estimating the tax increases will generate $7.3 million next year.

Ross said he supported Abernethy's suggestion of trying to offset the costs. Abernethy said people don't go to the bar just to get drunk, but to get out and socialize, dance or see bands play. He laughed when asked whether he was concerned about too many bars closing down and the impact that might have on his band Small Narrow Valley and their ability to get gigs.