Alcohol excise tax capped for two more years
Finance Minister Chrystia Freeland says the federal government will cap the annual alcohol excise tax increase on beer, spirits and wine at 2% an additional two years.
The alcohol excise tax had been set to rise on April 1 by 4.7%, tied to inflation, but Freeland announced that the increase is being capped at the lower rate. She also announced some tax relief for local craft breweries by cutting the excise duty rate on the first 15,000 hectolitres of beer in half for two years.
In Budget 2023, the federal government announced it would temporarily cap the inflation adjustment at 2% for beer, spirits, and wine excise duties, for one year only, as of April 1, 2023.
“Canada’s small craft brewers are among the finest in the world, and are an important contributor to our growing economy by creating jobs in communities across the country,” said Freeland in a press release upon the announcement. “Today’s announcement is good news for Canadians and for the craft breweries they visit, which will now benefit from thousands of dollars in new tax relief every year.”
The Canadian Craft Brewers Association estimates there are currently over 1,100 small and independent breweries in Canada, of which 95% generated less than $10 million in annual revenue. According to Statistics Canada, in 2022, breweries employed nearly 23,000 Canadians. In 2018, the Conference Board of Canada reported that the beer industry supported 149,000 Canadian jobs, paid $5.3 billion in wages, and contributed $13.6 billion to Canada’s GDP in 2016.
As of July 1, 2022, the federal government repealed the excise duty on non-alcoholic beer to encourage growth in the beer industry and provide Canadians with more non-alcoholic options.
Restaurants Canada is applauding the move, saying the financial relief will give operators a chance to catch their breath as they try to cope with inflation and bounce back from the COVID-19 pandemic.
READ: Ontario beer drinkers get reprieve from tax hike
“The cap on the alcohol tax gives operators a chance to catch their breath. For the past four years, restaurants have been dealt one blow after another,” said Kelly Higginson, president and CEO of Restaurants Canada in a release soon after the announcement was made. “Our most recent data shows 62% of restaurants in Canada are operating at a loss or barely breaking even, compared to 12% pre-pandemic. These establishments are not just businesses; they are the heart of our communities, representing dreams, passions, and social connections.”
The Canadian Taxpayers Federation says it is good to see some relief, but the government shouldn't be raising alcohol taxes at all.
