Distillers hope federal budget scraps alcohol escalator tax

Tax hike set for April 1, marking third automatic increase in three years time

Distillers across Canada are calling on Finance Minister Bill Morneau to repeal a tax that has automatically increased the cost of alcohol for three years, with the next hike April 1.

Morneau was set to deliver his government’s final budget ahead of the October election on Tuesday. He has not indicated any plans to do so, but Spirits Canada hopes he will repeal the liquor escalator tax.

The tax, introduced in 2017, is automatically renewed each year without a vote, and sent spirit prices up 17 per cent last year, according to the organization that represents spirit distillers.

Eighty per cent of what people pay for beer, wine and spirits is already taxes, CEO Jan Westcott said in a news release Tuesday.

“Today’s escalator tax is having the same negative effect it had when Canada last experimented with it in the 1980s: sky high prices, a freeze on investment, closed distilleries, lost jobs and Canada losing ground versus our international competitors.”

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The increase this April will amount to a few cents per litre, while wine will go up by one to two cents. Beer will climb four to 75 cents per 100 litres. Taxes are based on the percentage of alcohol.

The tax also affects tobacco, which will rise in cost one cent per five cigarettes and 60 cents per 1,000 cigars. Cannabis is also included, but that price will not go up in April.

According to Beer Canada, Canadian beer is taxed $20.31 per case on average, compared to $4.12 in the U.S.


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