07/30/2013 01:50 EDT | Updated 09/29/2013 05:12 EDT

LCBO Asked By Ontario Restaurants To Extend 'Diplomat' Discount

OTTAWA - Ontario's restaurant owners want the province's liquor agency to give them the same deep discounts it gives to the diplomatic community.

The Liquor Control Board of Ontario last month started giving foreign embassies and consulates a 49 per cent discount on beer, wine and liquor sales.

A so-called "embassy" discount — which also applies to federal government purchases — was already in place, but the agency made its products even cheaper for the diplomatic corps starting June 23.

On Tuesday, a group representing Ontario's restaurants said the new discounts are unfair when they have to pay full retail prices for alcohol.

In an open letter to the liquor board, Joyce Reynolds of the Canadian Restaurant and Foodservices Association called the agency's pricing scheme an "insult" to hard-working business owners.

She says the industry employs 425,000 Ontarians and contributes $25 billion a year to the provincial economy, while diplomats offer no economic benefits to the province.

"Yet again, the LCBO has demonstrated that it is out of touch with current business challenges, and the financial burden of an overly complicated liquor control system," Reynolds said.

"We hope you will consider introducing a little more fairness into the beverage alcohol system for hard working Ontario business owners."

The association represents some 80,000 restaurants and bars, of which 30,000 are in Ontario.

The LCBO says it must offer discounts for foreign embassies because of a federal law, the Foreign Missions and International Organizations Act, and under the Vienna Convention of 1961.

An agency spokesperson says the uniform 49 per cent discount replaces a hodge-podge of previous discounts that were incompatible with a new computerized sales system.

Under the new discounts, a case of imported wine that costs ordinary consumers $203.18 is priced at $104.80 for this group, including HST and bottle deposit.

That's $26.47 cheaper than it was before the new system kicked in June 23.

Imported non-U.S. beer is also cheaper by $28.68 a case under the new discount system, though imported hard liquor went up in price.

The agency says the net savings to embassies, when all prices are considered, amount to only a few percentage points.

Embassies must order their alcohol through LCBO headquarters, rather than at retail outlets, to obtain the discounts.

LCBO spokeswoman Sally Ritchie says licensed restaurants get a price break as well.

"While they pay nearly identical prices to consumers, they subsequently receive a tax credit for the 13 per cent HST," she said.

"So in effect, they are purchasing at 13 per cent less than the consumer. Additionally, on Ontario wine, they receive a further five per cent discount."

Ritchie also noted that Canadian embassies abroad get reciprocal price breaks on alcohol purchases under the Vienna Convention.

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