This tax hike on alcohol happens annually in April and the amount of the increase is based on inflation.
This means that as inflation increases in Canada, the excise duty rate increases without needing approval from parliament. In the past, this increase has been manageable and has ranged from a 1.0-2.4% increase annually however, we are currently experiencing significantly higher than usual inflation which will see the excise duty rate increase to between 5.9-6.5%.
This increase would be unprecedented and simply unsustainable for businesses that are already dealing with some of the highest alcohol taxes in the world. It is estimated that this would cost Canadian alcohol producers an additional $130 million in additional taxes by 2023. This would not only affect alcohol producers who are major employers in the region, but also the entire restaurant, tourism and entertainment sector as well as individual consumers.
“Now is not the time to be raising the tax burden on industries which have been severely impacted by the pandemic, nor is it the time to be burdening consumers who have already been hit by high levels of of inflation,” says Kristen Duever, VP Public Affairs for the London Chamber of Commerce.
The London Chamber of Commerce and its partners are calling on the Government of Canada to suspend the alcohol escalator tax for the next two years or until inflation normalizes. If the escalator tax is not suspended, the annual tax increase will have a devastating effect on many businesses throughout the London region and the entire country.