The industry is facing high costs and low sales due to the current tax system
Ontario craft brewers are calling on the provincial government to make some changes to the alcohol tax system, which they say is hurting their business and threatening their survival. The brewers’ association has submitted its recommendations for the upcoming spring budget, which include reducing or eliminating some of the taxes that apply to beer cans, wine bottles, and spirits.
The impact of taxes on craft breweries
Scott Simmons, president of Ontario Craft Brewers, said that Ontario has the highest craft beer taxes in Canada, at about 40 cents per can. He said that this tax burden is unfair and unsustainable for a small industry that contributes $700 million to the economy and employs 4,500 people.
Simmons said that the tax system was designed more than 30 years ago with a goal of limiting imports from the United States, but it has become a barrier for local producers who want to compete in a growing market. He said that during the pandemic, sales of draft beer dried up as bars and restaurants closed, forcing many breweries to pivot to selling almost all of their products in cans.
However, he said that this also increased the cost of production and transportation for craft brewers, who have to pay an environmental tax of 8.93 cents per non-refillable container of beer, wine, or spirits. He said that this tax makes it harder for consumers to buy craft products at affordable prices.
Simmons said that if nothing changes soon, many craft breweries could close before they can take advantage of the new opportunity to sell their products in convenience stores by 2026. He said that this would not only affect their livelihoods, but also deprive consumers of more choice and variety in the alcohol sector.
The proposal for tax relief
Simmons’ top request was to eliminate or reduce the environmental tax on beer cans by 2024. He said that this would make it easier for consumers to buy craft products at lower prices and encourage more innovation and experimentation among brewers.
He also asked for a review of other taxes and fees that apply to alcohol products, such as excise taxes on wine bottles and spirits. He said that these taxes are too high compared to other provinces and countries, and they discourage consumers from buying local products.
Simmons said that he welcomes Finance Minister Peter Bethlenfalvy’s promise to review alcohol support programs, taxes, and fees as part of the implementation of the new system. He said that he hopes that the government will listen to his concerns and make some common sense changes that will benefit both consumers and businesses in a vibrant alcohol retail marketplace.
The response from the government
A spokesperson for the Ministry of Finance said he could not comment on what may or may not be in the budget, but he reiterated his commitment to increasing choice and convenience for consumers and providing opportunities for businesses to grow and thrive in a vibrant alcohol retail marketplace.
He also pointed out that since 2018, the government has been implementing various measures to support local producers through grants-in-aid programs such as Local Alcohol Producer Incentive (LAPI) program. He said that these programs provide financial assistance based on sales volume rather than profit margin.
He added that in addition to expanding sales of beer, wine, cocktails ready-to-drink (RTD), cider, and hard seltzer (HSD) products into convenience stores by 2026, the government is also working on developing new regulations and standards to ensure quality, safety, and traceability of these products. He said that these initiatives will help create a competitive and diverse alcohol sector that meets consumer demand and preferences.
