‘It’s another hit on the business’: N.B. brewers react to alcohol tax increase

The price of booze has increased under the Canadian beer tax.

The next time you visit your local liquor store or head to the local pub for a pint, it will cost you a little bit more.

The federal government’s alcohol escalator tax has undergone an automatic two per cent increase as of Wednesday. The federal excise tax affects beer, wine, and spirits.

“It’s too expensive now,” says consumer Ryan Nicholas on his way into a Saint John, N.B., liquor store when asked about the tax hike. “Especially in this area with this economy, how are people supposed to afford this?”

The measure was introduced in 2017 and was tied to inflation. In 2023, the increase was capped at two per cent following pressure from industry officials and it will remain capped at two per cent through to 2028.

For brewers like Paul Thibodeau, who is the operations manager at Drifter Brew Co. in Rothesay, N.B., the tax hike will be passed down to consumers through a slight price increase.

“When you’re talking about a $5 can, we’re looking at maybe about $0.05 to $0.07 that it increased on the can,” Thibodeau says. “Probably with a keg you are maybe looking at a dollar more.”

The brewer admits the decision to raise prices was not an easy one but is necessary to remain competitive in the New Brunswick craft beer market.

He says at almost every step of the beer brewing process there is some sort of cost or tax that has to be paid.

“We’ve been in this game now for about two years, so it’s been just constant rising costs,” says Thibodeau of the tax. “Whether it’s with cost of goods, cost of gas and freight, it’s just another hit on the business.”

According to Beer Canada President Richard Alexander, since the tax was introduced in 2017 alcohol prices have increased 18 per cent, which has cost taxpayers around $1.6 billion.

He says an 18 per cent increase in taxes has been mirrored by an 18 per cent decrease in beer purchases over that same time. Alexander says he would like to see the automatic tax increase scrapped altogether.

“We’ve seen all the unions that work in the brewing industry actually come together and sign a letter and send it to Mark Carney asking for them to stop because they’re worried about jobs,” Alexander notes.

“When sales go down and the price of beer goes up, it’s not only Canadians [concerned]. It’s the workers in our industry, in the hospitality industry, and the farmers that are really concerned about this tax increase.”

Alexander also points out that in Canada nearly half of the price of a can or bottle of beer is tax. He also notes that the country has the highest beer tax jurisdiction out of the G7 countries.

The increased beer tax and the tariff on aluminum out of the U.S. many brewers rely on to can their beers, could lead to some brewers moving their operations south of the border, or even closing altogether.

“Breweries want to stay in Canada, but taxation is a part of that decision,” Alexander says. “The federal government should be looking at it as a country that we want investment in Canada, and continuing to tax beer at the highest rates of any G7, much higher than the United States, is not good public policy.”

In a statement to CTV News Atlantic, New Brunswick Liquor Corporation spokesperson Tanya Greer says the tax increase will result in minimal increases at the checkout. She says the biggest impact will be on spirits, where customers could see a price bump of 20 cents on average, which are subject to a higher excise tax.

She also says some suppliers will absorb the added cost themselves to keep prices on the shelf the same.

For more New Brunswick news, visit our dedicated provincial page.