The Northwest Territories "sin tax" on alcohol aims to curb abuse by charging a higher percentage of tax on cheaper alcohol, according to officials.

Consumers in the N.W.T. pay a liquor tax based on the volume of alcohol, not the price. So $28 in tax is charged on a one-litre bottle of hard liquor, whether it's the cheapest brand of vodka or the most expensive bottle of single-malt scotch.

"Say for a bottle of spirits, being a rum or a vodka, [there's] a flat tax on it. So what we're seeing here is our more expensive spirits are cheaper and our more inexpensive spirits are more expensive," said Perry Smith, who owns a liquor store in Yellowknife.

N.W.T. Finance Minister Michael Miltenberger said this approach taxes the alcohol that people buy most frequently, namely the cheaper brands.

One of the reasons behind the high tax is the prevalence of alcohol abuse in the territory. Miltenberger said revenue from the sin tax helps the territorial government with alcohol addiction programs and other related social measures.

"It's the one tax that we've gone to the most over the past few years, alcohol abuse being one of the biggest social problems," Miltenberger said. "You want to discourage youth as much as possible."

Customer dissatisfaction

Results of a recent survey by the N.W.T. Liquor Commission found that the majority of consumers are dissatisfied with prices in Yellowknife.

"You pay for 24 beer in Edmonton. Anywhere down south you pay $30; here it's $55-something," said Yellowknife resident Janet Brown, who stocked up this week with two flats of beer and some spiced rum in time for New Year's Eve.

"It's almost worth driving to Edmonton, stocking up and bringing it back with you."

Taxing alcohol works differently in other jurisdictions. In Alberta, for example, the markup depends on volume and alcohol content, so a one-litre bottle of liquor there would have about $13 in tax. In Yukon, a 12 per cent tax applies on every type of liquor.

Smith said other jurisdictions put less tax on cheaper alcohol products, making up for it by charging more on higher-end products.

"The flat markup that they use here is a very fair system because it doesn't really matter what type of spirit it is, the markup is applied across the board," he said.

But even the cost of liquor in N.W.T. stores is not discouraging customers over the holidays. Liquor store staff say the last two weeks of the year are always the busiest sales period.