Native brewers hoping for freeze on federal beer tax

Local breweries are asking the federal government to put a pause on its beer tax.

The beer tax is scheduled to increase again in April.

“Beer prices are already too high,” said George Croft, president and CEO of Waterloo Brewing Co.

Croft said taxes make up 52 per cent of the cost of a case of beer. Federal tax accounts for 20 per cent of that, and the other 80 per cent is provincial.

“We pay $61 million in tax every single year and our net earnings are about $4 million,” Croft said. “So, what does that mean? That means that the government of Ontario and the federal government, they made 15 times the amount of money on our business than we do.”

That includes the federal excise tax, known to many as the “escalator” tax because it automatically increases each year to keep up with inflation.

“At the federal level back in 2017, then-Finance Minister Bill Morneau made the decision to, interesting decision, to automatically increase beer taxes every year for the rest of time,” said Luke Chapman, interim president of Beer Canada.

A campaign called #FreezeItForThem was created by Beer Canada to call on the feds to freeze the tax, which is set to increase in April.

“Let’s put a freeze on beer taxes to keep more money in the Canadian economy and help these businesses that depend on beer sales recover from the impacts of COVID-19,” Chapman said.

According to the office of Finance Minister Chrystia Freeland, the 2021 excise tax increase represents one-eighth of a penny per can of beer. The average cost of a case of 24 cans would go up by three cents.

“Putting a freeze on the beer tax is perhaps a small measure in the grand scheme of things, but it is something that would be helpful to those businesses,” Chapman said.

Croft said that it would represent an additional $120,000 in tax this year. Brewers need to either absorb the price or pass it along to customers.

“It has an accumulating effect that can really amplify the price of beer over time,” Croft said.

The ministry said smaller brewers pay a lower excise rate.

“Canadian brewers also have reduced excise duty rates for their first 75,000 hectolitres of beer produced each year, which particularly benefits small and craft brewers,” a statement from the ministry said in part. “The federal government will continue to be there for Canadians and businesses, as it has been since the start of the pandemic.”

Wellington Brewery in Guelph was not available for an interview but told CTV News they are also in support of the campaign.