It may be time to stock up.
Beverage alcohol tax has been tied to inflation in Canada since 2017, and will automatically go up 6.3% on April first – which is not an April Fools Day Joke.
“We had been in a 1-2% inflation environment for some time, people got used to that. Then bang, almost overnight and we are getting into double-digit inflation,” said CJ Hélie, the President of Beer Canada.
“What that means for the beer sector is barley prices went up 60%, packaging 40%, freight costs doubling.”
He said brewers have been reluctant to push price increases on consumers for a number of reasons, including the already slow rebound in the hospitality and dining sectors, where he said “it looks like in BC we are going to be down just under 1% from last year – not anywhere near where we were in pre-pandemic levels.”
Hélie explained a lot of this is because sporting events, concerts, festivals, and other similar events had a slow reboot in 2022 between the early pandemic restrictions and re-openings, and labour shortages.
As the costs of these behind the scenes needs went up, so did the taxes.
According to Hélie, about 47% of the cost of beer in BC is pure tax, with similar numbers around the country.
“We are not saying ‘there should be no taxes on beer,’ we are saying ‘47% is pretty high, isn’t that enough?’”
Once that April 1st tax increase of 6.3% – the largest year-over-year increase in 40 years – kicks in, that number will go over 50%.
Hélie said Canada has the highest beer tax of any G7 country.
“I think Canadian beer taxes would be about 45% higher than other G7 countries on average,” he said.
“Look at trends. G7 countries like Japan and the US have either decreased or are planning to decrease beer taxes, while in Ottawa they have this brilliant idea to increase federal beer taxes every year by inflation.”
Beer Canada had opposed this automatic tax increase since it was first introduced in 2017, but they never expected it to spiral this far out of control.
“The response of the government in the last 3-4 years has been ‘go away, we don’t want to talk about it, what’s the problem, there’s no issue.’ In the last 12 months, that dialogue has changed completely.”
Politicians from all of Canada’s parties have voiced sympathy towards Hélie and Beer Canada.
“The policy intent was not to have a 6.3% beer tax increase on April first that will have huge negative impact… We are confident that if a bill was put in front of the house of commons, we would have overwhelming support to freeze beer taxes.”
If the Beer Party of Canada were to be elected tomorrow, Hélie said that is what they would do.
“We have nobody saying we are wrong, it is just the question of… can we get through the noise to get a bill brought forward to fix this anomaly.”
One of his biggest concerns is that if taxes continue to increase, brewers will not be able to eat the cost.
“Brewers so far have been very slow and reluctant to pass on all those costs into the prices of their product, because of the fragile nature of their market and because of the way bars and restaurants have been struggling.”
This year, Hélie said beer retail prices are up 5.6% year-to-date.
“Next year,” this coming April, that could be another 10%.
“I have a hard time even saying it, because we have never seen that kind of change. I don’t even know if the market can bear that.”
Locally, this tax catches at least two of our three breweries at a very bad time – Deadfall Brewing, who are very small and still brand new, and Crossroads Brewing, who have just expanded into a second location in College Heights that is currently closed for renovations.
For more information on Beer Canada, click here.
– Files from Will Peters, My PG Now