‘Beer tax’ increase capped at 2 per cent until 2026, Freeland announces

Finance Minister Chrystia Freeland says the federal government will cap the annual alcohol excise tax increase on beer, spirits and wine at two per cent for an additional two years.

The alcohol excise tax had been set to rise on April 1 by 4.7 per cent, tied to inflation, but Freeland announced on Saturday that the increase is being capped at the lower rate until 2026.

“In recent years, we’ve seen that the cost of key ingredients for beer … are rising due to the impact of global inflation, and that’s been a real challenge for brewers in Canada,” she said.

“Our government really recognizes the value, particularly of small businesses … and we also recognize the affordability challenges, so that’s why we’ve taken this decision.”

The alcohol industry has been pushing the government to scrap the planned excise tax increase ahead of the April 1 deadline for the increase.

Freeland also announced some tax relief for local craft breweries by cutting the excise duty rate in half for two years on the first 15,000 hectolitres of beer.

She said Canada’s small craft brewers are among the finest in the world and are an important contributor to the economy.

Conservative Leader Pierre Poilievre has criticized the government’s plan to raise alcohol taxes, along with the carbon tax, on April 1.

Prime Minister Justin Trudeau “keeps raising taxes. It’s enough to drive a man to drink, but he wants to tax that, too,” Poilievre said in the House of Commons late last month.

Restaurants Canada, which represents the country’s food service industry, 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.

The Canadian Chamber of Commerce also weighed in on Saturday.

“We welcome the government’s announcement to freeze the escalator tax on alcohol and spirits. Today’s announcement will help provide relief to Canadians and struggling businesses, particularly in the hospitality sector,” said Robin Guy, a vice-president with the organization.

The Canadian Taxpayers Federation said while it is good to see some relief, the government shouldn’t be raising alcohol taxes at all.