Tax on alcohol set to rise 4.7 per cent in April

Staring April 1, consumers could notice a difference in the price of alcohol when making a purchase.

The federal “alcohol escalator tax” is set to increase 4.7 per cent at the start of April. The federal excise tax will affect beer, wine and spirits that will result in an extra $100 million to taxpayers nationwide over the next year according to the Canadian Taxpayers Federation.

“It’s a constant barrage of increasing prices,” says Saint John Ale House owner Jesse Vergen. “So yeah it’s a little tough to swallow.”

The latest tax increase joins a growing list of higher costs. Vergen says everything is as expensive as ever from electricity to food prices, and is hopeful the federal government will step in and reduce the rate rise.

He is still unsure how the tax hike will impact his day-to-day operations. He is hopeful to not have to raise his prices on drinks to help make ends meet.

“It’s something we are going to have to look at and look at our business model and see how sustainable it is for us to eat the cost because we can’t just keep putting up the price of beer,” Vergen says. “There comes a level where people will only spend X amount of dollars on a pint of beer.”

“In Canada the beer tax is already the highest in the G7,” says Beer Canada president CJ Hélie. “Across Atlantic Canada over 50 per cent of the price a consumer is paying for a case of beer are taxes so there is no room there to impose a new tax at this time.”

According to the CTF, taxes already account for around half the price of beer across the country, 65 per cent the price of wine, and more than three quarters of the cost of spirits.

Hélie says a further tax increase is unnecessary, and is hopeful to change the federal government’s mind before things come into effect.

“I feel very strongly that we have the votes in parliament to stop a nearly five per cent tax increase,” he says. “Everybody I talk to that’s an elected official agrees that this would be a really dumb economic decision and really dumb political decision.”

Last year, the tax on alcohol was suppose to raise over six per cent within the automatic formula that regulates the increase before the feds stepped to make the jump only two per cent. If a similar decision were to occur this year it would happen during the budget process in March.

While Hélie is confident he has the support within government to ensure the near five per cent hike won’t happen, he isn’t sure if it will be brought to the table given other more pressing matters.

“This is important to lots of families, lots of business. There is 160 brewers operating across Atlantic Canada and they provide really great paying jobs so it is important to safeguard those,” he says.

Both NB Liquor and the Nova Scotia Liquor Corporation (NSLC) say the federal excise tax is only a small component in determining prices on alcohol, but it could lead to a minimal increase at the checkout.