Alcohol excise tax capped at 2 per cent for 2 more years 'a major win' for restaurants and consumers: group

Capping the excise tax on alcohol at two percent for two more years will help keep prices at bay for many retailers and consumers, an association representing Canadian restaurants says.

On Saturday, the Government of Canada announced that it will continue to implement a two per cent cap on alcohol-related excise duties for Canadian businesses, and particularly local craft. The alcohol excise tax had been set to rise on April 1 by 4.7 per cent, tied to inflation.

“Canada’s small craft brewers are among the finest in the world, and are an important contributor to our growing economy by creating jobs in communities across the country,” Deputy Prime Minister and Minister of Finance Chrystia Freeland said. “Today’s announcement is good news for Canadians and for the craft breweries they visit, which will now benefit from thousands of dollars in new tax relief every year.”

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In addition, the first 15,000 hectoliters of beer brewed in the country will have their excise duty rates cut in half, “to provide the typical craft brewery with up to $86,952 in additional tax relief in 2024-25.”

This extends plans in the 2023 federal budget to cap excise duties on all alcoholic products for one year, instead of a planned 6.3 per cent increase.

“The cap on the alcohol tax gives operators a chance to catch their breath. For the past four years, restaurants have been dealt one blow after another,” Kelly Higginson, president and CEO of Restaurants Canada, said, calling it a ‘major win.’

Higginson says that their most recent data shows over half of the restaurants in the county haven’t recovered financially since the pandemic, with 62 per cent operating at a loss or barely breaking even compared to 12 per cent pre-pandemic.

“These establishments are not just businesses, they are the heart of our communities, representing dreams, passions, and social connections,” she said.

The Ford government announced a two-year freeze on beer and wine tax on Feb 9, 2024. Ontario has blocked the increases, which reflect the rate of inflation, for the past six years for an estimated cost of about $200 million.

“This announcement is great news for breweries, distilleries and wineries from all across Canada who contribute so much to our national economy,” Rechie Valdez, the federal minister of small businesses, said. “Not only are they producing incredible products, they are also small businesses who are creating jobs and opportunities in their local communities.”

With files from The Canadian Press and CP24's Joshua Freeman.