The federal government’s newly-released 2023 budget has great news for the spirits, wine, and beer industries.
The scheduled increase in excise duties for alcoholic products beginning April 1, 2023 has been capped — temporarily — at 2% instead of the original 6.3% prescribed by the automatic escalator provision from 2017 which automatically indexes the amount to total Consumer Price Index (CPI) inflation at the beginning of each fiscal year or April 1st.
The proposed measure will have the following rates instead:
Both Beer Canada and Restaurants Canada have positively responded to the measure.
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“Faced with already very high tax rates, increased operating costs and depressed beer sales volumes, a 6.3% federal beer tax increase this year would have been devastating to brewers, brewery workers, the hospitality and tourism sector and hard-working Canadian consumers,” Beer Canada President CJ Hélie said in a statement.
“We are appreciative that Minister Freeland took action to provide the sector some breathing room to recover.”
Both groups had called on the government to address the increase, citing that they’re already struggling with higher costs all around, from ingredients to manufacturing.
The planned increase would’ve also been the largest jump in alcohol excise duties in four decades. The proposed 2% cap is temporary, effective only for 2023 to 2024 fiscal year. But the government is optimistic that inflation could slow by next year, therefore the automatic escalator provision would not be as devastating to the industries and consumers.
Information for this briefing was found via the Budget 2023, Beer Canada, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
