March 29, 2023, Ottawa – Spirits Canada, the voice of the distilled spirits industry in Canada, applauds the federal government’s decision to cap the inflation adjustment for excise duties on alcohol at 2% for 1 year, as outlined in yesterday’s budget.
Effective April 1, 2023, and otherwise set to increase by 6.3%, this decision strikes a compromise based on the Standing Committee on Finance’s (FINA) recent recommendation to freeze the automatic excise increase for a period of 2 years.
Since implementation in 2017, the escalator tax, as it is also known, has imposed automatic annual increases on alcohol with yearly changes driven by the Consumer Price Index (CPI). When this tax was first introduced, Canada had, for many years, been experiencing inflation in the range of 1% to 1.5%. The 2% cap announced yesterday aligns with part of FINA’s recommendation to freeze excise duties “until inflation returns to the Bank of Canada’s 1% to 3% target range.”
“This outcome is certainly better than the anticipated 6.3% tax hike. Given the challenging economic times we’re all dealing with, a 2-year reprieve would have been ideal, however, we do appreciate the government’s decision to cap the excise increase at 2%”, said Spirits Canada’s President & CEO, Jan Westcott. “Canadians already pay some of the highest alcohol taxes in the world, but this gesture of support for consumers and for our struggling hospitality sector will help minimize the resulting price increases. Considering the record high inflation, capping the escalator increase is a step in the right direction”, added Westcott.
For 200 years, Canadian distillers have proudly produced world-class spirits: gin, rum, vodka, liqueurs, and the iconic Canadian Rye Whisky. Our distillers purchase 100% of their input grains (corn, wheat, barley, and rye) directly from local Canadian farmers. Domestically, the sector supports 8,500 full-time jobs and pours $5.8 billion annually into the GDP. And globally, Canadian distillers export over $660 million in product each year.
The Canadian spirits industry is a significant economic contributor, and a strategic opportunity for growth, job creation, and prosperity.
Spirits Canada strongly encourages adults who choose to consume beverage alcohol do so responsibly and in moderation.
Media Enquiries: To arrange an interview with Jan Westcott, President & CEO of Spirits Canada, contact Via Dulay, Senior Manager of Communications