B.C. beer and wine makers say new federal tax will make alcohol pricier

Cracking open a cold one next year could cost you more as a new federal tax on alcohol is set to start.

The new tax on alcohol is set to begin in 2023, and increase the cost of the product by over six per cent.

 

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“This is an automatic increase in a tax, which is very rare and odd and it just doesn’t make sense and it’s prohibitive,” said president and CEO of Wine Growers British Columbia, Miles Prodan.

Prodan and others in the industry are calling on the government to put a freeze on the tax.

Beer Canada, which advocates for Canadian brewers, says the alcohol excise duty is tied to inflation, and automatically goes up every year.

In a news release, the group says this equals $45 million in taxes over the year that will affect consumers and businesses.

Canada’s Fall Economic Statement 2022 fails to address strong consensus recommendation from brewers, hospitality, tourism, & labour unions to freeze beer taxes in recognition of today’s challenges & the current unique business environment. https://t.co/zYjVjWAze8

— Beer Canada (@BeerCanada) November 3, 2022

CJ Helie, the president of Beer Canada, says most people wouldn’t be able to recognize the new tax because the cost comes through the supply chain and not on the receipt.

“It is a hidden tax. Most consumers would have no idea there’s such a thing,” Helie said. “It is imposed at the manufacturer’s level as soon as they make the product. So what that means is that it’s embedded into the price initially as the supplier sells to the distributor, from the distributor to the retailer, or the bar, and so it gets marked up all along the way.”

He says the situation is already bad, and the new tax will make it worse.

Like many other industries in the province, Helie says the industry is already dealing with rising production and operating costs, and this tax increase will drive beer prices even higher.

He adds the cost of barley — a key ingredient in making the popular drink — in addition to rent, insurance, and packaging, have all risen recently.

 

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Wine Growers BC says the wine industry is also grappling with increased costs compounded by declining crops over the past three years.

“Given the inflationary pressures, supply chain issues, and all those – it’s a worst time as ever to have that happen,” said Prodan.

“We take a look at why that is and it’s climate change, it’s heat domes, it’s floods, atmospheric rivers, these are all contributing to making it harder and harder to grow grapes,” he added.

Making things more difficult, Prodan says, is competition from outside Canada.

“There are wines, import wines, from across the world that are subsidized by their governments that come in very cheap and so consumers have got a choice and we recognize that and we know that in the instance of British Columbia, that’s not the cheapest products on the shelf – I would argue it’s the best value – and it supports people in B.C. and in Canada but we can’t pass that along,” he said.

Both Prodan and Helie are hoping the federal government provides relief with a tax freeze on the excise duty for 2023 at least next year.

“We’re running out of time – but let’s fix this before Apr. 1,” said Helie.