‘Runaway’ beer taxes threatening Canadian brewers, industry says
A new federal escalator tax will raise prices on everything from Molson Canadian and Labatt Blue to craft IPAs and stouts every year for the foreseeable future
OTTAWA—The Canadian brewing industry is looking to rile up and unite beer drinkers against a new federal government “escalator” tax that threatens to add to the price of everything from ubiquitous Molson Canadian and Labatt Blue to craft IPAs and stouts starting this April.
The industry association that represents the country’s largest brewing companies—as well as a number of smaller producers—kicked off its “axe the beer tax” campaign Jan. 15.
The group timed the launch to coincide with the release of a new Conference Board of Canada report that took stock of the beer industry, finding it accounted for $13.6 billion in economic activity in 2016. In recent years, Canadian beer consumption has declined by about 10 per cent per capita, though sales on a volume basis have remained largely flat.
The report, which was commissioned by the beer industry organization, blamed numerous factors for the decline in consumption, including demographic changes, increased competition from wine and spirits and higher taxes. Federal and provincial taxes on beer accounted for nearly half (47 per cent) of the average price of beer across the country and add $5.7 billion to government coffers in 2016.
The latest “escalator” tax passed last year, however, will add to the price of suds starting April 1. The new legislation will automatically increase the tax on beer and other alcoholic beverages to keep pace with inflation—and does so in perpetuity.
“Imagine being stuck on an escalator going up and up and up, and you cannot get off, and you cannot make it stop—that’s what beer lovers in Canada are facing with this escalator tax,” George Croft, chair of Beer Canada, said in a statement.
With about 85 per cent of beer sold in Canada brewed domestically, the industry group says the tax leaves brewers as well as the farmers and transportation networks they rely on vulnerable.
In December, the Canadian Taxpayers Federation also came out against the tax, saying it sets a “troubling precedent for tax policy.”
While tax on beer accounts for about half the final sales price, that figure is about 80 per cent for spirits and 65 to 70 per cent for wines, the CTF said.