The 4.7 percent federal beer tax increase scheduled to go into effect on Apr. 1 is another hit to an already struggling brewing industry

Taras ManzieRunning a craft brewery in Canada is tougher than ever. Many brewery owners, including myself, entered this business with the goal of bringing people and communities together over a cold pint. However, with rampant inflation driving up the cost of everything, achieving this mission has become increasingly difficult.

In our small community of Kenora, Ont., we witness the financial strain on people regularly. The combination of soaring inflation and the subsequent increase in interest rates is erasing disposable income. Unfortunately, for many, one of the first items on the chopping block is enjoying a beer with a friend at the local brewery.

Lake of the Woods Brewing Company is facing this new reality in real time. As we manage the rapid rise in beer production costs while trying to avoid dramatic increases in beer prices, we’ve noticed a decline in visitors to our taproom. In fact, draught beer sales in our brewery taproom remain well below pre-pandemic levels. This is a stressful truth for many craft brewers across Canada.

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Photo by Fábio Alves

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Considering the current challenges facing Canadian brewers and consumers, it’s alarming that our federal government appears committed to adding to the burden by implementing a 4.7 percent increase in beer taxes on Apr. 1, 2024.

We have never been fond of the idea of federal beer tax rates that are tied to inflation and increase automatically without parliamentary debate. This aversion, however, has grown in recent years as the size of each annual increase has increased dramatically in lockstep with the rising inflation. To put it in perspective, it has been decades since Canadian brewers faced a one-time increase of 4.7 percent, surpassing the Bank of Canada’s inflation target of two percent and the previous automatic rate increases we’ve seen in recent years.

Last year, we welcomed and appreciated Minister of Finance Christina Freeland’s decision to replace the scheduled 6.3 percent rate increase with a more manageable two percent increase. This decision helped brewers to better manage rising production costs and retail beer prices.

Unfortunately, the rationale supporting the decision to cap last year’s rate increase remains even more relevant today. In 2023, industry beer sales volumes in Canada reached a 48-year low, and with the current market and economic challenges facing Canadians, there is a prevailing sense of pessimism within the industry as we look out on this year and beyond.

As I write this, Canada holds the dubious reputation of having the highest beer tax rates among our major trading partner countries. Lake of the Woods Brewing Company and our colleagues in the Canadian brewing industry fully recognize the need to pay our fair share of taxes. However, we believe it is crucial for the federal government to reconsider its current tax policy, considering that the industry is navigating extremely challenging times.

We are not asking for a handout or a tax reduction; we are simply asking our government to take a break from constant tax increases. Cancelling, or at the very least, capping the 4.7 percent beer tax increase scheduled for Apr. 1 would allow the government the time to acknowledge the hardships Canadians are facing and provide some small reprieve.

From my perspective, proceeding with this increase signals that the government is not serious about making life even a little more affordable for Canadians or aiding small businesses in their recovery and growth.

Minister, now is not the time for more taxes. We encourage you to make the right decision and cancel or, at the very least, cap the upcoming increase.

I am confident that people across Canada will be ready to cheer that decision if they can still afford to buy a beer.

Taras Manzie is President of Lake of the Woods Brewing Company in Kenora, Ontario.

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