At Nine Locks Brewing in Dartmouth, N.S., hundreds of cans can be seen getting ready for delivery to bars, restaurants and the NSLC. The company survived the COVID-19 pandemic and has been trying to grapple with inflation ever since.
A tax increase means fewer bubbles on their bottom line.
“We can only absorb so much taxation without passing it on,” co-founder Danny O’Hearn said.
“It hurts the small businesses. We’re a craft brewery in Nova Scotia. We can’t continue to have these five per cent excisable taxes slapped on us every year without us putting the prices up.”
The federal government is set to increase the federal tax on alcohol starting April 1, amid calls to cancel it.
The alcohol excise tax is set to go up by 4.7 per cent, which Kelowna-Lake Country Conservative MP Tracy Gray said will cost Canadians about $100 million extra in 2024-25.
Since the tax is an escalator tax, meaning it is automatically increased, there is no debate or vote in Parliament each time scheduled increases go ahead. Before the automation of its increases, the tax had to be approved by Parliament every time it went up.
The tax was cut down to two per cent last year amid calls from the industry.
“I think when there’s enough tax being put on by the government,” O’Hearn said.
“When it was two per cent or one and a half per cent, no one really noticed it, but to base on inflation in the past few years, it’s devastating to brewers.”
O’Hearn told Global News the cost of materials to make beer has significantly increased in recent years, which is also felt by the New Brunswick Craft Alcohol Producers Association.
According to Lloyd Chambers, the association’s president, producers feel unheard by the federal government, citing an already high tax on alcohol.
“(The federal government) has to at least put a hold on it for right now,” Chambers said in an interview with Global News this week.
“I don’t think they truly understand the industry, they don’t understand what this does to producers’ bottom line.”
The tax is doled out to producers, who in turn can pass it along to restaurants, businesses or consumers.
Chambers expects some producers will try to “eat it” in order to save costs to consumers but expects some craft brewers in New Brunswick will be forced to pass on the cost.
— with files from Global News’ Ryan Rocca
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