Ontario breweries could be forced to close due to 'stiffling' alcohol tax system, association says

Glasses of beer are seen in this undated photo. (AFP)

If Ontario doesn't speed up a review of alcohol taxes and eliminate some of them soon, craft breweries across the province could close before the market expands to convenience stores, the brewers' association is warning.

Scott Simmons, president of Ontario Craft Brewers, said in submissions for the provincial spring budget that the group welcomes the recent announcement that sales of beer, wine and ready-to-drink cocktails will be expanded to convenience stores by 2026.

But if the current tax structure remains in place until then there may be fewer local breweries to take advantage of that, Simmons said.

"They're just being stifled right now," he told a legislative committee this week.

"We're suffocating this homegrown industry, which I think would be a shame if another year goes by and there's no change, because we'll see a big chunk of this industry disappear."

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Finance Minister Peter Bethlenfalvy has promised a review of alcohol support programs, taxes and fees as part of the implementation of the new system. A spokesperson for the ministry said he could not comment on what may or may not be in the upcoming budget.

"Since 2018, the government has remained committed to increasing choice and convenience for consumers and providing opportunities for businesses to grow and thrive in a vibrant alcohol retail marketplace," Scott Blodgett wrote in a statement.

"In the months ahead, the government will continue to meet and consult with industry partners and others on an expanded alcohol marketplace that ensures choice, competition, and convenience while upholding Ontario's high standards of social responsibility."

Ontario has the highest craft beer taxes in Canada, and if changes are made it will help the industry grow, Simmons said.

"Here's the choice before you: continue with the status quo and Ontario's craft brewing industry, and the 4,500 jobs and the $700 million in economic benefit could disappear," he told the committee.

"But, make common sense, measured and long-overdue changes to Ontario's beer tax system (and) our industry could be bigger and stronger than ever, benefiting consumers, the industry, and the province's bottom line. It's a win-win-win."

Simmons' top request was to eliminate a roughly nine-cent tax on beer cans. The environmental tax of 8.93 cents is on each non-refillable container of beer, wine and spirits. Simmons said the tax was introduced more than 30 years ago with a goal of limiting imports from the United States. The burden on craft brewers increased during the pandemic, he said, as sales of draft beer dried up with bars and restaurants closed and breweries pivoting to nearly 100 per cent of sales in cans.

The government has frozen the basic beer tax rate since March 2018 but that freeze is set to expire next month, and Simmons said the way that tax is applied to local producers should be eased before rate increases resume.

This report by The Canadian Press was first published Jan. 10, 2024.