Tax hike could drive alcohol prices up

Supplier charge means any increases will be on ‘product-by-product basis’

Restaurants Canada says ‘the restaurant sector cannot absorb another federal tax increase at this vulnerable time’

Get ready to see alcohol prices rise this spring. A 6.3 per cent federal tax increase on beer, wine and spirits is scheduled for April 1.

The fee won’t show up directly on your receipt, though; as with all excise taxes, the charge will go to suppliers at the point of manufacture, rather than at the point of sale.

The scheduled increase for suppliers is the result of a 2017 policy adopted by the federal Liberal government that sees the tax rate change according to the consumer price index, or the rate of inflation.

For Ontarians, price changes at the LCBO may vary.

“Any retail price increases are on a product-by-product basis and determined by beverage alcohol producers,” a spokesperson for the crown corporation told the Star in an email.

Their prices are a combination of the supplier’s price, “plus federal import & export duties, freight, levies, a standard markup, HST and container deposit,” the spokesperson said.

“Our suppliers set their own pricing (subject to minimum retail prices) and have the option to adjust their pricing up or down throughout the year.”

Restaurants Canada, a national, not-for-profit association representing the country’s food service industry, is calling on the federal government to freeze the duty, saying in a tweet that “the restaurant sector cannot absorb another federal tax increase at this vulnerable time.”

The Canadian Chamber of Commerce is on the same page, saying that taxes account for “nearly half the price” of a beer in Canada, a figure that has been contested.

In 2021, the Public Health Agency of Canada published a report that challenged claims by Canadian brewers and distillers that about 50 to 80 per cent of the price of alcoholic drinks are government taxes, and found that industry groups had “exaggerated” the level of taxation applied to alcoholic beverages.

While distillers claimed the taxation rate was 80 per cent, the report found it to be between 20 to 30 per cent. Brewers, meanwhile, claimed the rate to be 47 per cent, but the report estimated it to be between 16 and 18 per cent.

The authors investigated the claims using Statistics Canada data as well as provincial-level product sales data and breakdowns of the prices of typical alcohol beverages in major market sectors.

According to a new Statistics Canada report, alcohol sales have plummeted across the country.

Beer sales per person reached an all-time low in 2022, and wine sales based on volume experienced the largest decline since tracking began in 1949.