Saskatchewan breweries are warning drinkers to have a sober second look at alcohol prices in the wake of a new tax hike.
On Sunday, the federal government rolled out a 1.5 per cent increase on the excise tax to liquor, beer and spirits. The tax will be increased each year by the rate of inflation.
Mark Heise, the president of Rebellion Brewing Company in Regina, said Monday while he isn’t pleased about being taxed more – the change is a “non-issue” for local producers.
“It’s a very interesting slight-of-hand by the big breweries, that are not owned by Canadians anymore, who are using it as an excuse to raise their prices,” he said.
Heise said before April 1, breweries paid 6.244 cents a litre in excise tax. Now, they pay 6.338 cents.
“That’s the one-and-a-half per cent increase. That’s a fraction of a penny. I don’t even know how you even measure that,” he said.
He explained the excise tax on a 24-pack of beer – previously 50 cents – is now 51 cents.
“Frankly, we’re not going to pass on a one-cent increase to consumers on a 24-pack of beer,” he said.
“Beer Canada is doing a masterful campaign trying to confuse consumers into believing the government is causing them to drive up the prices of their beer. Which, they just want to increase the prices of their beer.”
These sentiments were echoed by Shawn Moen, the CEO and co-founder of 9 Mile Legacy Brewing in Saskatoon.
“Being a small, independent craft brewer is a lot different from being a large, multi-national brewer,” Moen said.
“The large multi-nationals are upset because they deal in volume. So a small incremental increase is meaningful to them.”
He said the bigger threat for local beer companies are changes to provincial levees, adding last year’s expansion of the Provincial Sales Tax had a ripple effect on the industry.
“We provide beer to restaurants that have to charge PST on the bill and as a result, I think you saw food and beverage revenues go down,” he said.
The Canadian Taxpayers Federation (CTF) have also raised concerns about the federal government’s alcohol tax escalator, namely the automatic nature in which the increase takes place.
Aaron Wudrick, the federal director of the CTF, said this is a serious problem because people deserve to know when taxes increase to hold governments accountable.
Since alcohol is already taxed at a high level, Wudrick added the tax escalator will only add to the pressure on breweries and distilleries.
The CTF has launched an online campaign to oppose the tax escalator.