Beer, wine and spirit taxes set to rise in new year

You can add the cost of alcohol to the long list of items impacted by inflation.

A new tax on beer, wine and spirits is set to begin this year that will see the cost of the product soar by over six per cent.

That's not good news for Marc Melanson, the owner of Flying Boats Brewery in Dieppe, N.B.

Melanson is trying to run his business while preparing for the new federal tax hike that will see his craft beers jump in price due to an escalator provision.

The federal government decided in 2017 an excise tax would automatically increase with inflation every year on April 1.

That's a tax hike of 6.3 per cent for 2023.

"At the end of the day, we're just passing on costs that have been put on to us," said Melanson. "This is a federal imposed tax. Now that this has been announced, are provincial regulators going to be looking at that and probably also add a tax? So we're going to have a tax on the tax."

It's a similar sentiment up the road at the CAVOK Brewing Company.

Inflation has increased the price of production and co-owner Serge Basque said adding taxes on top of that means they'll have to pass the tax hike along to consumers as well.

"We won't have a choice. To survive as a business, we have to make some profit. The margins that we are doing are not excessive. They're not really, really big. In order for us to pay our employees and pay for all the ingredients, then we have to make some profit," said Basque.

Basque said inflation is increasing the costs on everything like ingredients and cans. Inflation is also hurting customers who don't have as much money in their pockets.

"You add taxes on top of that, the prices I think in the near future will increase dramatically," said Basque.

The brewers say the alcohol tax will be tough to deal with but wonder how consumers feel.

Elizabeth LeBlanc said it's not good at all.

"The home wine making and the home brewers are going to be affected too. Everything is out of reach for pricing. Food, gas, everything," said LeBlanc.

Eric Dixon said a 6.3 per cent increase sounds like quite a bit.

"We want to buy local, we want to support the microbreweries but if they have to pass it on to us, it's definitely going to deter us to it," said Dixon.

Franco Terrazzano, the federal director of the Canadian Taxpayers Federation, said taxes make up about 50 per cent of the price of beer, 65 per cent for wine and more than three quarters of the price of spirits are taxes.

"So in P.E.I., taxes on a case of beer make up more than the total retail price in about half U.S. states," said Terrazzano.

As far as if Maritimers think they're paying too much in alcohol taxes, Dixon thinks so.

"I would say yeah," said Dixon. "Compared to the States, it's much more expensive. It's very much a luxury but we're getting gouged for it now."