Significant reduction in federal beer tax recommended

The price of beer, wine, and spirits was the subject of some political wrangling on Parliament Hill on Friday as the federal finance committee recommended a significant cut to the planned alcohol excise tax.

The federal tax on booze is tied to inflation and is set to jump 4.7 per cent on April 1. The parliamentary committee is recommending cutting that increase in half.

The NDP’s Daniel Blaikie and Conservative Pat Kelly say a reduction is needed.

“It does not make sense to raise the tax in a period of extraordinary inflation,” said Blaikie.

“We cannot become a country where the simplest, middle-class pleasures become unaffordable,” added Kelly.

CJ Helie with Beer Canada calls it a positive step as brewers are already struggling with higher production costs and falling sales.

“Barley up 60 per cent, packaging up 40 per cent, transport costs have doubled – they are having a very difficult time,” he said, adding that the wild swings with inflation show the tax is flawed.

While Helie says the finance committee motion could be a good compromise, he’s hoping for some long-term changes.

“To, at a minimum, cap it and maybe, hopefully, freeze it and then maybe even eliminate it.”

The Ford government in Ontario announced last week a two-year freeze on the beer basic tax and LCBO mark-up rates that were set to go up by an estimated 4.6 per cent on March 1. The move, which the government has done for the past six years, is estimated to cost about $200 million.

It’s unclear if Finance Minister Chrystia Freeland will accept the recommendation for her spring budget. A statement from her spokesperson says their economic plan is focused on making life more affordable but notes the excise tax is an existing law and not a new provision.