Alcohol tax set to kick in, impacting local breweries

A federal tax hike of 6.3 per cent on alcohol is set to kick in April 1, impacting breweries that make more than 75,000 hectolitres annually.

One hectolitre is one hundred litres.

Big Rock Brewing in the city’s southeast has operations in Vancouver and Toronto.

It makes two million cans of beer every year, and is charged around $4 million in federal excise tax.

That will go up at the start of next month.

“Beer is not very price elastic, which means we actually can’t charge more and have a hard time charging more, because consumers look at beer as a staple,” said Brad Goddard, director of business development and government relations at Big Rock Brewing.

“We’ve been pushing for a total reimagining of the excise structure. I think the least we were hoping for is that they would pause everything and seriously consider revising excise tax and it hasn’t been touched.”

Goddard adds that the tax increase in the last eight years has gone up, but never really been questioned.

“The bizzare thing about this tax, is it increases without discussion, increases every year like a zombie tax,” he said.

“It’s almost like forgetting to cancel a subscription for Netflix and you just keep getting billed for it and billed for it.”

The federal government says the tax will equate to a little less than one cent per can (355ml) that is made.

“If the large brewers pass along the taxes to the consumer, it would be a penny per can in increased tax,” said Jordan St. John, a beer expert based in Toronto.

St. John says he understand why breweries and Beer Canada are looking to save some money when inflation is high.

“This is just one more in a series of problems that brewers are facing,” he said.

“I think that they feel that possibly the Government of Canada could be a good partner in trying to combat that.”

Last year, the tax went up 2.4 per cent. This year it will be 6.3 per cent and 18 per cent overall since the federal government tied excise tax increase to the inflation rate in 2017.