Federal Gov’t Drops Excise Tax Hike From 6.3% to 2% to Help Producers

Wine, beer and spirits producers posted a major political win, as the federal government agreed to cap an increase to the excise tax to just two per cent.

While no one likes any tax increases, this was seen as a victory for the industry, because the federal excise formula would normally have seen the tax increase by 6.3 per cent this year.

The issue is that the excise tax is based on inflation, so if prices rise generally, so does the tax rate.

But wineries, distillers and microbreweries protested that the increase, combined with rising costs, would have a huge and negative impact on their bottom lines.

“This proposal temporarily caps the inflation adjustment for excise duties on all alcoholic products at 2 per cent for one year only as of April 1, 2023,” reads the budget.

Beer Canada president CJ Hêlie said he was grateful for the government’s help in reducing the excise tax increase.

“Faced with already very high tax rates, increased operating costs and depressed beer sales volumes, a 6.3% federal beer tax increase this year would have been devastating to brewers, brewery workers, the hospitality and tourism sector and hard-working Canadian consumers.” CJ Hélie said in a statement.

“We are appreciative that Minister Freeland’s took action to provide the sector some breathing room to recover.”