The restaurant industry in Canada is preparing for the highest increase in alcohol excise duty in more than 40 years, prompting concerns that the tax increase may drive some pubs and eateries out of business.
Restaurant and bar owners across Canada have had to deal with lockdowns, staff shortages, supply chain chaos, and rising costs for everything from cooking oil to payroll. Demand has also been tempered by rising prices as some customers stay at home to conserve money.
By legislation, the excise tax is adjusted annually on April 1 in accordance with the CPI. (aka inflation). The federal excise tax on alcohol is increasing by 6.3% this year as a result of the high rate of inflation.
Excise taxes are levied at the point of manufacture, during packing for local items, and at import for foreign products. According to the federal government, liquor board fees and provincial taxes account for the majority of the cost of alcohol products, with excise taxes accounting for a very tiny part of that total.
Restaurants, Bars and Producers are not happy
Canadian Restaurant and Bar owners fear the worst to come! After years of COVID restrictions and closures, many restaurants and bars have closed their door due to overwhelming expenses and meagre if any income. Those who managed to stay afloat and still healing the wounds from years of lost business and income fear this new federal tax hike could put the final nails in the coffin.
The increase may not seem high, but many believe inflation already has hurt them enough and this may be the last injury.
She stated that the rise the following month amounts to less than a penny on a beer can.
According to data from the Canada Revenue Agency, the excise duty rate on a litre of wine will rise to $0.731 from $0.688, or a little over four cents. The price rise would be closer to three cents for a 750 ml bottle of wine.
The average casual dining restaurant is anticipated to pay an additional $30,000 for alcohol, according to industry association Restaurants Canada, which estimates it will cost the Canadian food-service industry approximately $750 million annually.
The effect might be less noticeable at the retail level. Consumers may notice higher prices even though they are piled on top of other price increases.
If manufacturers pass along the rise in the federal excise tax, customers may see price increases on a few goods by the end of April, according to the Liquor Control Board of Ontario.
According to the LCBO, a 750ml bottle of wine or an imported six-pack of beer may increase by five to ten cents, while a 750ml bottle of 40%-alcohol spirit may increase by seventy cents.
Beer producers in Canada raising the biggest voice over upcoming tax increase with Facebook adds.