Will Justin Trudeau stop the biggest beer tax increase on Canadians in 40 years?

On Feb. 14, Beer Canada organized a lobby day on Parliament Hill. It was great to get back to in-person events that have not been possible for several years. But this year’s “run on the Hill” felt very different from those of the past. Brewery unions, including representatives from the Service Employees International Union, the Canadian Union of Brewery and General Workers, the Fish, Food and Allied Workers, and Unifor; barley and grain farmers; maltsters; small, medium, and large beer companies; restaurateurs; spirits, wine, and cider producers; tourism organizations; and alcohol retailers all came together with a common message: now is the time to freeze federal alcohol taxes. As a sign of what’s at stake, this is the broadest and deepest coalition ever to come together to fight for fairness for Canadian beer. In a period of high inflation and rising interest rates, when brewers’ costs are at their highest and per capita beer consumption is at an all-time low, a rigid formulaic tax policy that then imposes the biggest beer tax increase in 40 years defies common sense. The excise tax “escalator” is badly flawed policy, and there are many valid reasons to defer further scheduled tax increases until inflation returns to more normal levels. It’s not clear why some in government appear so wedded to this dated policy. They often resort to simplistic sound bites that ignore the current market context and the real impact on workers, consumers, and businesses. But you don’t need to take our word on its real-life impact. According to Restaurants Canada, this year’s beverage alcohol increase will impose a new $30,000 tab on a typical casual licensed restaurant. Maybe even more pernicious is that this tax policy adds to inflation, making life less affordable for Canadians and making the Bank of Canada’s job to return to its two per cent CPI inflation target more difficult. CJ Hélie was appointed president of Beer Canada in June 2021. Photograph courtesy of Beer Canada Brewery union workers are concerned with the uncertainty these annual inflation-based tax hikes may mean for future labour gains at the negotiating table. Grain farmers and maltsters know that higher prices that lead to lower beer consumption inevitably means fewer bushels of premium malted barley and hops sold in the domestic market. Beer is nearly unique within Canada’s processed agri-food sector with 88 per cent of beer consumed here, made here. That means that any significant contraction of the domestic beer consumer market will be felt from the farmer’s field to the choices available to beer lovers. Nationally, out-of-home beer sales volumes in bars, licensed restaurants, sporting venues, and festivals remain 25 per cent below pre-pandemic levels. Some of this is certainly due to reduced capacity, but many consumers also have not yet fully returned to their past habits. Clearly, cost-of-living increases across both essentials and discretionary items means many families are more cost conscious of their purchasing decisions than ever. Tourism, another key driver of the hospitality sector, also remains well below pre-pandemic levels. For example, international travellers to Canada in September 2022 were 6.1 per cent below those in the same month in 2019, and domestic travel by Canadians within Canada was also still down more than three per cent. And, of course, higher beer taxes mean beer prices will go up and this will harm consumers, hospitality businesses, and the beer industry. It’s hard to believe that in a period of hyperinflation our government would choose to make life more expensive. We hope the government uses the opportunity of this year’s budget to address the upcoming beer tax increase. It’s a simple way for the prime minister and the deputy prime minister/minister of finance to demonstrate to Canadians in a tangible way that they care, have their backs, and understand the impact of higher costs of living due to widespread inflation. It’s also sound policy with huge support from MPs across all parties. We remain hopeful that the government will do the right thing and freeze this tax. Otherwise, on April 1, Canadians will have a very bad tax hangover. CJ Hélie is a veteran Canadian beverage alcohol executive with more than 30 years of experience and was appointed president of Beer Canada in June 2021. The Hill Times

Will Justin Trudeau stop the biggest beer tax increase on Canadians in 40 years?

The excise tax ‘escalator’ is badly flawed policy, and there are many valid reasons to defer further scheduled tax increases until inflation returns to more normal levels.

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Will Justin Trudeau stop the biggest beer tax increase on Canadians in 40 years?

The excise tax ‘escalator’ is badly flawed policy, and there are many valid reasons to defer further scheduled tax increases until inflation returns to more normal levels.

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