Canada: Finance minister announces tax relief aimed at small breweries

Canada’s finance minister announced tax relief aimed at the country’s small breweries ahead of a deadline that would have seen certain duties on domestic beer, wine and spirits more than double, Bloomberg reported on March 9.
The government is proposing to cap an inflation adjustment for excise taxes charged on domestically produced beer, spirits and wine at 2% for the next two years, Chrystia Freeland said in a statement on March 9, extending a similar limit implemented last year. It was previously set to increase to 4.7% as of April 1.

Ottawa will also cut by half the excise duty rate on the first 15,000 hectoliters (264,150 cases) of beer brewed in Canada for two years. This should give craft brewers an average of about C$87,000 ($64,500) in tax relief, according to the statement. Some 94% of Canadian brewers have total production below that level.

The changes will cost the government C$153 million over two years, according to the Department of Finance, which said they “will be included in a legislative vehicle soon.”

Excise taxes are imposed on alcohol and tobacco products produced domestically and are charged to producers at the time of packaging, a parallel system to the duties imposed on imported products.

The proposed changes, which still need to be passed in Parliament, come after the beer industry lobbied for relief on this front for a second year in a row. Taxpayer groups and restaurant and hospitality associations similarly urged the government to step in to prevent automatic tax hikes designed to rise with inflation, which has increased at a rapid pace in recent years.

The federal opposition also criticized the so-called “escalator tax” and called on the government of Prime Minister Justin Trudeau to stop the tax increase, arguing it would hurt local producers and lead to higher prices for consumers.

“Canadians have told the government not to raise alcohol taxes and it’s nice to see the government take a small step in that direction,” Franco Terrazzano, federal director for the Canadian Taxpayers Federation, said in a statement on Saturday.

Freeland is poised to announce the government’s budget on April 16.

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