THE PRICE OF BEER
Brewer wants tax escalator repealed
Saskatoon’s largest brewery is pushing for an end to a steadily increasing tax on beer that will cost it $274,000 more this year than 2016.
Great Western Brewing Company president and CEO Michael Brennan said in a statement on Thursday that the company is calling for the “automatic annual escalator” on the federal excise tax on beer to be repealed, ahead of the federal budget being released next week.
The tax, implemented in 2016, goes up each year by a predetermined amount.
Brennan said the company wanted to make its position public because despite the increasing financial drain, it’s not something that would pop up in the new budget.
“I don’t think we would tell you that we should be immune to taxes. But a tax that goes up and is not discussed, and no one really knows, and it just ever increases, that’s where I have a fundamental issue,” Brennan said.
In a press event at the company’s headquarters in Saskatoon, Brennan illustrated his concerns by pouring out beer into pint glasses. He said the federal excise tax accounts for about one third of the cost of a can of beer, while the other two thirds go to the aluminum cans and the production of the beer. He did not say how the company’s profit fits into that ratio.
Brennan also said the increasing tax effects make competition with American businesses more difficult. According to a Great Western Brewing Company news release, federal taxes on beer in Canada are an average of 53-per-cent higher than in the United States.
The tax increase won’t change company’s operations much in the short term, but Brennan said the tax increases do have a “direct impact” on the cost of beer.
“We don’t really want to pass all the increases through to consumers, so that means we have to make hard decisions,” he said.
His company is not alone in the country in speaking out against the increasing tax, Brennan said. Beer Canada, a nationwide trade association, is helping connect breweries across the country who are also speaking out against the tax, according to Brennan.
Right now, he said they hope to raise consumer awareness about the tax and find ways to manage the costs without passing it all on to the people buying the product.
“We’ve gone through some fairly difficult times as a brewery over the last few years ... so we’ve made some very difficult decisions. The most important one is to continue to call this our home,” he said.