Trudeau government may bring in smaller than expected beer tax hike

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If Canadians are lucky, they won’t face a tax hike of more than 6% on booze on April 1. They will still face a tax hike but the hope among industry insiders is that the Trudeau government may scale the tax back to a 2% increase.

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That will still sting for both consumers and producers, especially on top of increasing prices due to inflation, but a 2% hike is better than a 6.3% hike.

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The annual April 1 tax hike on all beverage alcohol started in 2017. The budget that year called for 2% tax hike, “effective the day after Budget Day, 2017, and that rates be automatically adjusted to the Consumer Price Index on April 1 of every year starting in 2018.” Of course, those were the days of low inflation and the government never expected inflation to spike the way it has.

Sure, the industry complained, but the Trudeau government was easily able to ignore them over complaints about small tax increases. Plus, they liked the extra revenue the annual tax increases bring in.

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Between 2018 and 2023, industry estimates put the federal government’s increased revenue from all forms of alcohol at $335 million, a 20% increase, while beer taxes alone accounted for $125 million. If the 6.3% tax hike goes through, it’s estimated that the government will bring in an additional $125 million next year alone.

Over the past several months, though, the beer industry made a massive push to try and stave off the biggest tax increase on alcohol in over 40 years.

They used infographics to show that taxes already make up more than half the cost of beer. They used data from Statistics Canada showing that 88% of beer consumed in Canada is made here, meaning jobs.

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“Stop hosin’ us, you hosers,” said an ad featuring comedy duo Bob and Doug McKenzie (played by Rick Moranis and Dave Thomas) that called for beer taxes to be frozen.

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They even hired Cyrus Reporter, Justin Trudeau’s former chief of staff and a top advisor, to lobby for them. It’s a lot of effort that may not pay off, but the day before the budget drops, there is hope that some sanity prevails.

It doesn’t hurt the campaign that the NDP and Bloc Quebecois joined the Conservatives in voting for a motion calling on the government to freeze beer taxes, and that eight unions representing brewery workers backed the motion as well.

It’s unlikely the government will freeze the tax or even end the annual increases, but at this point, getting a smaller increase would be a win for an industry that has had a rough go of it the last few years. In addition to companies facing higher costs, higher interest rates and higher wage demands, consumers have been cutting back on purchases of non-necessities like beer and wine.

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Of course, alcohol taxes aren’t the only thing to get more expensive come April 1.

The carbon tax will go up next month and with it, the cost of many basic goods from groceries to the ingredients used in things like … beer. Yep, no escaping increases.

We will also pay more for our politicians are MPs get a pay hike. Backbench MPs will see an increase of $5,100 and Prime Minister Justin Trudeau will see a $10,200 salary increase from his current pay of $379,000 per year.

We know from well-placed leaks that the Trudeau government is concerned about the impact of inflation and will unveil a “grocery rebate” program worth more than $2 billion. According to reports, a low-income single person would receive $234, a senior citizen $225 and a couple with two children up to $467.

The increases for politicians seem a bit bigger, don’t they?

All the more reason to freeze the beer tax, or at least not raise it quite so high, it will make the beer more affordable to cry in at the end of the day.