CRAFT BREWERS SAY EXCISE TAX WILL HAVE LIMITED IMPACT

While Hamilton breweries are not happy about paying higher costs, the proposed federal 6.2 per cent excise tax on beer, spirits and wine set to take effect April 1 won't have any marketable impact on their product.

For instance, Ram McAllister, owner and head brewer at Fairweather Brewing, said the proposed tax hike will hit the small brewer with an additional 20.8 cents to 41.8 cents per 100 hectolitres produced or 0.21 cents to 0.42 cents per litre.

"We don't welcome any tax increase," said McAllister. "(But) this one has been misrepresented or misunderstood as the equivalent of a six per cent increase in the price of beer."

For Mark Horsley, brewer and owner of Barrel Heart Brewing in Ancaster, the tax increase will boost the cost of producing a bottle of his beer by about 1.5 cents.

Horsley, who is also a brewmaster and brewery operations management professor at Niagara

College, said higher beer prices "are more likely to stem from the price of malt increasing by 30 per cent, or more" from Europe. Horsley has been using malt from Ontario, which has not been impacted by the war in Ukraine. In addition, for Barrel Heart, the largest production cost is the time the beer spends aging in wine barrels and the price of local fruits from the Niagara region.

"Our prices are not going to change based on the tax increase," he said.

The excise rate is applied according to the volume a brewery produces and the amount of alcohol in the beer. For domestic brewers, the current excise tax ranges from $3.48 to $29.597 per hectolitre (100 litres) of beer, for beer containing more than 2.5 per cent alcohol by volume.

It automatically increases every year with the rate of inflation. When it was introduced in 2017, the federal tax on alcohol jumped by 2.4 per cent. It has increased 18 per cent since it was introduced.

In a recent report, the House of Commons Standing

Committee on Finance, which represented political representation from all parties, recommended the upcoming budget freeze federal beer, wine and spirit excise duties, capping the rate at 2022 numbers for 2023 and 2024, until inflation returns to the one to three per cent target range.

Hamilton Liberal MP Filomena Tassi said in a recent interview that "my caucus advocates" for the higher excise tax.

"The increase is somewhat challenging for these industries," said Tassi, who is also a cabinet minister. "We have provided many supports during the pandemic and really now it is about ensuring the investments

that we have made lead to future success."

Canadian Craft Brewers Association's executive director Christine Comeau stated that for brewers, the cost of items they use continue to rise.

"The vast majority of Canadian craft brewers are less than five years old and most are not yet profitable," she said. "These small businesses are already struggling with inflationary costs and another tax increase will make it difficult for some to survive."

The association, along with the Coalition of Canadian Independent Craft Brewers, recommended a "progressive, revenue-neutral, federal excise rate for beer to promote growth for Canada's independent craft brewers." The new schedule would lower rates for those at the lowest volume tiers to help brewers become profitable, she stated.

There are over 1,100 craft brewers that account for over 21,000 jobs in Canada.

The tax comes at a time when alcohol sales are down across the country. Beers sales per person reached an all-time low in 2022 and wine sales based on volume experienced the largest decline since tracking began in 1949.

STORY BEHIND THE STORY: We wanted to hear from craft brewers about how the new excise tax will impact their operations.