Big Beer’s budget battle

It’s not a Happy St. Patty’s for everyone. On the year’s premier drinking day, Big Beer is ramping up a fight with the federal government over a looming tax hike on the sudsy stuff. 

Driving the news: The feds will hike the alcohol excise tax—levied at the moment of manufacturing rather than the moment of sale, like a sales tax—by 6.3% in April. The feds introduced the tax in 2017 and adjust the rate annually to match the pace of inflation. 

  • Depending on the size of operations, domestic brewers will now pay between $3.70 to $31.46 for every 100 litres of 2.5% or higher beer they brew.
  • Beer Canada is as happy about the hike as Springfield was about non-alcoholic Duff, asking the feds to freeze the hike until 2025, when inflation (hopefully) calms down.

Beer Canada has an ally in the House of Commons Standing Committee on Finance. The bipartisan group said this year’s budget (set to be tabled three days before the hike) should include a freeze to help, “the prosperity and viability of the domestic beer industry.”

Why it matters: If the tax hike goes through, brewers will pass the new strain on their pockets down to consumers and establishments already dealing with inflationary pressures.

  • One craft brewer told Saltwire, “an increase right now is definitely painful.” If craft breweries are forced to raise prices any higher, consumers might start to trade down.

Yes, but: Making beer more expensive is sort of a win for the feds. New federal guidelines aim to encourage Canadians to drink less, and tax hikes are a great way to shift behaviour. While most people still aren’t about that, the young crowd is more likely to heed the word.