The Feds Are Capping The Excise Tax On Alcohol & Here's What It Means For Your Next Drink
Cheers! 🍻
Alcoholic drinks served on a table.
The 2023 federal budget has officially been tabled, and there's some good news for anybody who enjoys chugging back a cold one.
The feds are proposing a temporary cap on the excise tax on alcohol that was set to go into effect on April 1 as part of the affordability measures designed to combat the high cost of living in Canada.
In case you missed it, the federal tax on alcohol is automatically adjusted on April 1 of each fiscal year.
Canada's alcohol excise tax is tied to the Consumer Price Index, and given the record-high inflation, this year's hike was projected to be a whopping 6.3% — the highest Canada has seen in 40 years.
While the tax would primarily affect businesses, distilleries and breweries, many merchants have no choice but to pass the tax on to consumers by increasing prices.
But don't go spitting out that drink just yet, because there is some respite.
Budget 2023 has proposed temporarily freezing the inflation adjustment for the tax on beer, spirits, and wine at 2%.
This means that, if approved, the excise duty charged to businesses and breweries will increase by 2% next month rather than 6.3%.
This is actually more in line with last year's hike, which was 2.4%.
The proposed change would only be in effect for a year, though, starting April 1, 2023.
This means the tax could increase more than 2% next year, although the hope is that inflation rates will have fallen by then, making it a more sustainable hike.
The news has been positively received by those in the industry.
"Grateful to [Finance Minister Chrystia Freeland's] #Budget2023 decision to reduce April 1st beer tax hike to 2%, providing much-needed breathing room for brewers and hospitality sector to recover," Beer Canada — a trade association representing beer makers in Canada — tweeted on March 28.
So, while your next drink isn't necessarily going to get cheaper, at least you likely won't see a substantial jump in prices come April.
We can all raise a glass to that.
This article's cover image was used for illustrative purposes only.