QUESTION PERIOD — Finance
Alcohol Excise Tax
November 22, 2022
My question is for the Government Representative in the Senate.
The government’s Budget Implementation Act, 2017 introduced a tax provision on beer, wine and spirits which would result in an automatic increase to excise duties at the rate of inflation every year. When the escalator alcohol tax measure was first proposed, Canadian brewers, wineries and distillers indicated to the government that it was a bad idea to impose a permanent, automatic tax-increase mechanism that would not take into account economic conditions.
They were not alone in calling for its removal; in fact, the Standing Senate Committee on National Finance passed an amendment to the Budget Implementation Act, 2017 to remove that escalator tax. However, it was ultimately unsuccessful in the other place, and this chamber did not insist upon the amendment.
As such, we will see an increase in alcohol taxes of over 6% this coming April.
Canada already has some of the highest taxes in the world: On average, 47% of the price of beer, 65% of the price of wine and 80% of the price of spirits are allocated to taxes. As of 2021, Canadians were already paying about $20 billion per year in alcohol taxes. Any further increase in tax will harm not only our breweries, wineries and distilleries, but also those along the supply chain.
Senator Gold, will the government commit to re-evaluating the alcohol escalator tax to ensure Canadian consumers, alcohol producers and those involved along the supply chain — from agriculture, to manufacturing, to the food services industry — are taxed fairly?
Thank you for your question.
Like other taxes and benefits, senator, the alcohol excise duty rate is automatically adjusted each year to account for inflation. The government is of the view that this is the right approach, and that it provides certainty to this sector while ensuring that our tax system is fair for all Canadians.
My understanding is that the increase to which you refer is less than one fifth of one cent per can of beer, and there were specific measures implemented to take into consideration the needs of craft brewers. The government is committed to continuing to work to make life more affordable for Canadians — while working to promote healthy competition, thereby building the economy of the future.
Senator Gold, we know that bars and restaurants were deeply impacted by the pandemic. Further increases in alcohol tax will increase their already-high operating costs, and will reduce their ability to attract customers and retain employees as these businesses continue to work to survive. I would like to highlight that the escalator tax not only impacts the hospitality sector, but also the agriculture and agri-food sector, other supply-chain members and consumers.
I think many of you would agree that now is not the time to increase alcohol taxes on Canadians, or on our struggling restaurants, bars and domestic alcohol producers.
Senator Gold, as we all know in this chamber, the government is already working on measures to implement Budget 2023. In the interests of saving all Canadians money, will you ensure your government is aware of this issue, and remind them of this chamber’s amendment in 2017, as they prepare for their upcoming budget implementation act in 2023?
Thank you, senator. I will certainly make the government aware.
We are all aware of the burden that the pandemic imposed — not only on the hospitality industry but on many businesses. I will repeat that the automatic tax will raise the tax on a can of beer by less than one fifth of one cent. I would hope that responsible bar and restaurant owners will not pass on a disproportionate amount of that increase to their customers.
