Canadian Taxpayers Federation critical of 2 per cent federal alcohol tax hike

Beer prices in Canada could increase again this year.

The Canadian Taxpayers Federation, an advocacy group, is critical of the federal government’s upcoming hike on the alcohol tax.

According to the government’s website, the rate of excise duties for beer containing no more than 1.2 per cent absolute ethyl alcohol by volume will rise from $3.067 to $3.128 on April 1. The change represents a two per cent increase.

The Taxpayers Federation says the hike is expected to cost $41 million in the next fiscal year.

“Automatic tax hikes are undemocratic, uncompetitive and unaffordable and they need to stop,” said Franco Terrazzano, federal director of the Taxpayers Federation, in a news release. “If politicians think Canadians aren’t paying enough tax, they should at least have the spine to vote on the tax increase.”

Beer Canada president Richard Alexander says it is a terrible time for another automatic tax to be slapped on alcohol, when those in the beer industry are having to reduce their production volume because of lower demand, which he relates to higher prices on beer from increased taxes.

“At a time when you have an affordability crisis and, at the same time, we have a trade war going on with the United States and the Trump administration that is driving up prices for brewers... do we really need an increase right now?” questioned Alexander.

Although the upcoming tax increase might not seem like a lot, its cumulative impacts are hurting those in the brewing industry, said Alexander.

He added it’s also impacting those in the farming and agricultural industry, like those who grow barley, and those in the restaurant and hospitality sector, as well as consumers who will see a more expensive can of beer.

“The cumulative effect is that tax has now increased by 18 per cent since 2017,” said Alexander. “And the federal government has now collected $1.6 billion more in excise tax on alcohol than they were in 2017.”

It was the Trudeau government who brought in the alcohol excise tax in 2017, that automatically increased the federal alcohol tax by two per cent annually, but industry says that’s bad policy and it should be open to debate, instead of increasing automatically.

At a time when everybody is talking about affordability, it’s a lot for the industry and consumers to absorb, said Alexander.

“We want to support Canada through taxation,” he said. “But open it up for debate in the House of Common like other taxes.”

With files from CTV Atlantic’s Jesse Thomas