Beer, wine and spirits tax set to rise April 1 as brewers call for relief

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OTTAWA — An Ottawa craft brewer says rising alcohol taxes are among the factors that have pushed his business to the brink, as the federal government prepares to implement another automatic excise tax increase on April 1.

Paul Meek, owner of Kichesippi Brewery, says this will be his final April 1 as a brewery owner as he moves to shut down operations. While he says high taxes are not the sole reason for the closure, they have added pressure to an industry already operating on thin margins.

“Taxes were a small factor and margins were tight. It’s still a factor,” he said. “How Ontario and Canada are taxed is behind the rest of the world.”

The federal government raises excise taxes on beer, wine and spirits each year on April 1 under an automatic “escalator tax,” introduced in 2017 and tied to inflation. In 2023, the increase would have exceeded six per cent because of high inflation, but was capped at two per cent following pressure from brewers, distillers, the hospitality industry and the Opposition.

That two‑per‑cent increase is now set to take effect on Wednesday. Meek says he would like to see the annual increases scrapped altogether.

“Nobody was asking for this. It was a nice easy way for government to grab some quick money,” he said.

CTV News has learned the federal government will be extending the cap on the excise tax for two more years, keeping it at two per cent.

A senior government official familiar with the file but not authorized to speak publicly says the measure will help craft brewers and distillers across the country during “a period of extreme volatility”.

Alcohol tax hurts restaurants, pubs: CTF

The Canadian Taxpayers Federation (CTF) is calling on the federal government to eliminate the tax, arguing it will increase costs for consumers and threaten restaurants, breweries and pubs.

“Carney’s alcohol tax hike will make life more expensive and make it harder for Canadian restaurants, breweries and pubs to survive,” said CTF federal director Franco Terrazzano said in a statement Monday.

The Canadian Craft Brewers Association says some relief was granted in 2023, when smaller brewers were allowed to pay only half of the tax increase on the first 15,000 hectolitres they produce.

That relief is also being extended for two more years, the source told CTV News. The federal government believes the move will protect Canadian jobs and stabilize beer prices ahead of the busy tourist season and as Canadian cities prepare to host a number of World Cup soccer matches.

“We are calling for relief up to the first 500,000 hectolitres,” said Christine Comeau, executive director of the association, adding that the current tax structure discourages growth, mergers and acquisitions in a heavily regulated industry.

The CTF estimates the April 1 tax increase will generate an additional $41 million in federal revenue in 2026.

Meek says most local brewers are not making large profits and are focused on producing quality local products. He says rising excise taxes represent another cumulative burden on the sector.

“It’s death from a thousand cuts. It’s a small burn that will get bad for other people,” he said.