Federal Budget Caps Alcohol Excise Duty at 2% for 2023

OTTAWA, ON – In a move that is being welcomed by many in the brewery and hospitality industries, the Government of Canada‘s Budget 2023 includes a temporary 2% cap on the federal excise duty applied to beverage alcohol.

The duty is scaled based on brewery size and alcohol content, and since 2017 all levels have been automatically increasing annually based on the rate of inflation. This meant a jump of 6.3% was expected to go into effect on April 1st.

Since the excise duty makes up a small percentage of the cost of alcohol, that increase would have translated to roughly one cent per can or bottle from a large domestic brewery, and even less on beer produced by smaller breweries.

However, campaigns against the hike by industry organizations and lobby groups including Beer Canada, Restaurants Canada, and the Canadian Craft Brewers Association led to a great deal of media coverage of the issue, most of it framing the increase as exceptionally large and onerous.

In a statement released following the budget announcement, CJ Hélie, President of Beer Canada, said following:

“We are grateful that Minister Freeland responded to today’s unique business circumstances, a struggling hospitality sector and a fragile consumer and reduced this year’s increase in federal excise duties from 6.3% to 2%. Faced with already very high tax rates, increased operating costs and depressed beer sales volumes, a 6.3% federal beer tax increase this year would have been devastating to brewers, brewery workers, the hospitality and tourism sector and hard-working Canadian consumers and we are appreciative that Minister Freeland’s took action to provide the sector some breathing room to recover.”

The federal excise duty on alcohol will return to an inflation-based escalator model as of April 1st, 2024, unless a similar reduction or complete repeal is included in next year’s budget.

For more details, see the full Beer Canada press release, and coverage of the excise tax reduction at CTV News.

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