The Federal government has released its Fall Economic Statement for 2022, but there are some pertinent details missing. The report fails to address the strong consensus recommendation from brewers, hospitality, tourism, and labour unions to freeze beer taxes in recognition of today’s challenges and the current unique business environment. 

“It is extremely disappointing and frustrating that today’s update has no measure to address next year’s looming 6.3% federal tax increase on beer”, said CJ Hélie, President of Beer Canada. “A further inflation-indexed tax hike on beer next year will impose unnecessary and willful harm on Canadian consumers, the hospitality sector and Canadian brewers of all sizes”.

The Federal government’s Fall Economic Statement 2022 fails to address the strong consensus recommendation from brewers.

First introduced in Budget 2017, Canadian federal alcohol excise duties increase automatically on April 1st each year by a CPI inflation-indexing formula determined the previous September. Without a legislative amendment to the Excise Act, beer excise duties will increase by 6.3% on April 1st, imposing a new annual $45 million beer tax on Canadian consumers and businesses.

“Tying beer taxes directly to CPI inflation creates a vicious upward spiral. A 6.3% tax increase that is further magnified by provincial beer and sales taxes will place upward pressure on consumer beer prices already rising due to increased production costs, and these higher beer prices push inflation even higher”, added Hélie.

In the absence of a clear commitment by the Government that next year’s scheduled federal beer tax increase will not proceed, Canadian brewers will likely now need to adjust their 2023 business plans to account for the largest single beer tax increase in the nation’s history.

According to Beer Canada’s sales statistics, on-premise beer sales volumes in licensed hospitality venues remain 30% below pre-pandemic levels.

Beer Canada estimates that the flow-through impact of next year’s beer excise duty rate when added to increased beer production and operating costs, all magnified by cascading provincial commodity and sales taxes, including the federal GST may raise beer retail prices by 6% to 9%.

At nearly 50% of the typical retail price, Canadian consumers already pay amongst the highest beer taxes in the world.

Public Accounts Canada report that federal Treasury beer excise duty revenues rose 17.1% between F2022 and F2017, while industry market reports indicate beer sales volumes declined by 7.5% over the same period.

SOURCE: Beer Canada