April 1 is a day marked on the calendars of many Canadian craft beer brewers, distillers and wine makers, as the federal government is bumping up the excise tax on alcohol by 4.7 per cent, more than double last year’s increase of 2 per cent.
But what exactly is the federal excise tax?
“An excise tax on alcohol is a tax that the federal government puts on alcohol as it’s produced,” said Richard Alexander, executive vice-president of Government Relations and Public Affairs for Restaurants Canada, a national non-profit that supports the food service industry.
What does this mean for brewers, distillers and wine makers who say they’re already crushed under the weight of federal and provincial taxes, along with COVID-19-related inflationary pressures?
“It has an escalator clause to it, which means that as inflation increases, so does the amount of the tax and the result is, essentially, that when small businesses in our restaurant industry is hurting the most from inflation, that’s when the government piles on more taxes,” said Alexander of their concern for the increase.
In Kingston, Daft Brewing owner Adam Rondeau said it’s a punch to the gut.
“We’re at a time where, in hospitality in general, there’s like record closures and bankruptcies. We’re coming out of COVID; we’re basically in a recession,” said Rondeau.
While the average consumer may not pay it much mind, Rondeau and Alexander both say it’s clear who will suffer the most.
“It’s not like we can just eat that cost. It’s just going to, inevitably, get passed on to the consumer,” he added.
“Unfortunately, the consumer at the end of that line is the one who ends up paying for it,” said Alexander.
Now, Restaurants Canada and other groups that represent restaurants, bars, brewers, distillers and the like, are asking the government to cap the increase at 2 per cent, the same as they did last year when faced with a 6.4-per cent increase.
Last week, the Province of Ontario halted its own increase, which was set to happen March 1, for one year.
With April 1 on the way, Alexander is encouraging craft beer lovers to reach out to their local MPs.
“This is the absolute worst time to do something like this. Just cap it at 2 per cent, that’s all we’re asking,”