Canadian Beer Tax Panic Over-Hyped

On April 1, the government plans to increase the tax on local and imported beer by under 2 percent. The tax, however, won’t affect prices much when you break it down, according to economic experts.

Currently, the federal tax on beer is $31.84 per hectoliter. The increase will bring it to $32.32 per hectoliter, according to Beer Canada spokesperson Brittany Moorcroft.

This increase will take place every year in line with the cost of inflation. Moorcroft said the scheduled 2018 “escalator” tax amounts to a 1.51 percent increase.

With the new tax, the cost per beer at a restaurant would be about half a penny, which is less than what is possible to pay with actual currency, according to Toronto beer writer and expert Jordan St. John.

The tax increase may be most noticeable when purchasing a case, in which the tax could bring the cost of a 24-bottle case up by about a nickel, according to CBC.

But putting the word ‘tax’ and ‘beer’ in the same sentence tends to put people in a state of panic. Beer Canada, a trade association representing about 50 brewers, has started lobbying to “axe the tax” and is asking the public to email Finance Minister Bill Morneau as well as local MPs.

According to St. John, Beer Canada is making the tax more of a problem than it really is.

The last time the tax on beer was raised significantly was over 30 years ago, according to finance Minister spokesperson Chloé Luciani-Girouard. And the larger brands of beer are the ones that will be seeing the effects of this increase such as Coors Light, Molson Canadian, Budweiser, and the like. These brands can afford to eat the costs so consumers don’t have to, according to AB InBev, who owns Labatt and Molson Coors.

Eventually, the built-in tax increase will add up over time, but it will take until 2040 to see a dollar difference, according to St. John. 

All of this is to say that the tax won’t be enough to stop Canadians from buying beer, according to Joe Lesica, assistant professor of economics at Wilfrid Laurier University in Waterloo, Ont.

“That’s probably what the government is thinking, you’re not going to change your beer buying habits and the tax is going to get collected,” Lesica said.

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