Instead of a planned 6.3% rise, Canada has temporarily capped an increase in excise duty on alcohol at 2% for a one-year period. The decision was based on the Standing Committee on Finance’s (FINA) recent recommendation to freeze the automatic excise increase for two years until inflation returns to the 1% to 3% target range.
Since 2017, the government has implemented automatic annual tax increases on alcohol based on the Consumer Price Index (CPI) annually on April 1. When it was first introduced, inflation was sitting in the range of 1% to 1.5%.
“This outcome is certainly better than the anticipated 6.3% tax hike. Given the challenging economic times we’re all dealing with, a 2-year reprieve would have been ideal, however, we do appreciate the government’s decision to cap the excise increase at 2%”, said Spirits Canada’s President & CEO, Jan Westcott. “Canadians already pay some of the highest alcohol taxes in the world, but this gesture of support for consumers and for our struggling hospitality sector will help minimize the resulting price increases. Considering the record high inflation, capping the escalator increase is a step in the right direction”, added Westcott.
With last year's adjustment exactly one year ago, Canada removed alcohol excise taxes on beer containing no more than 0.5% alcohol by volume. The duty-free treatment for non-alcoholic beer was designed to be consistent with how non-alcoholic wines and spirits are already treated in Canada and how Canada’s major trading partners treat non-alcoholic beer. (inside.beer, 7.4.2022)
The actual excise duty rates on beer in Canada can be found here.
