With Canadian beer consumption falling and taxes on the alcoholic beverage set to rise, the industry is calling on the federal government to scrap a plan to tie annual tax hikes to inflation.
Beer Canada, a trade association for the country’s major brewers, has launched a campaign asking suds-loving Canadians to sign a petition requesting that Finance Minister Bill Morneau axe the escalating beer tax. The association argues that further hikes will result in more expensive prices and less industry investment.
“Beer drinkers are going to be faced with higher prices because of higher taxes. That’s not favourable for sales,” said Luke Harford, the association’s president.
“Brewers are going to be left with less money to invest in their plants, their people and their communities — and that’s not a good thing either,” he added.
The petition collected 15,400 signatures as of Tuesday morning, according to the association.
In last year’s federal budget the Liberal government increased the excise duty rates on alcohol products, including beer, by two per cent, Finance Minister spokeswoman Chloe Luciani-Girouard said in an email. That amounts to about a nickel per 24-bottle case of beer, she said.
At the time, the government also announced it would annually adjust the tax by indexing it to the consumer price index with the first inflationary adjustment coming this April.
“It’s worth remembering that the last effective increase to the federal excise tax was over 30 years ago,” said Luciani-Girouard, adding small Canadian brewers are charged decreased rates on the first 7.5 million litres of beer.
“The annual inflationary adjustment will provide alcohol producers with greater certainty in the future and is in line with actions taken by many provinces,” she said.
Already, 47 per cent of the price of beer in Canada is tax, according to Beer Canada, which represents 50 brewers who make more than 90 per cent of domestic beer consumed in the country.
Future tax increases would further hurt an industry facing challenging times as beer consumption is declining in Canada, Harford said.
Between 2012 and 2016, per capita beer consumption decreased 7.55 per cent from 83.4 litres to 77.1 litres, according to Beer Canada figures.
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Aleksandra Sagan, The Canadian Press