Local brewer Karl Whiffen says that a two per cent increase in federal beer tax is unlikely to hit his customers in the pocket when it kicks in this spring.
But Whiffen, who co-owns Uncle Leo’s Brewery with his wife Rebecca in Lyons Brook, felt that Ottawa must be more open about why it should be raised every year.
“It bothers me a little bit that there’s an automatic increase on a tax every year,” said Whiffen. “I feel like that’s something that should be discussed and debated.”
Whiffen added that excise tax is currently legislated to go up by two per cent a year and this will be the second such increase he and Rebecca have seen.
Excise tax on brewers is measured by beer output per hectolitre. One hectolitre equals 100 litres. This unit of measurement is used for beer, wine, grain and other types of agricultural produce.
Uncle Leo’s footprint is relatively small: its 900 square-foot facility produces 1,000 hectolitres of beer per year, or 100,000 litres.
As such, the costs imposed through the federal excise tax have not been too painful, but it has added more cost to Uncle Leo’s beer products.
“As we grow it will definitely become more of an issue for us,” said Whiffen.
Over at the Backstage Brewing Company, owner AJ Leadbetter said the excise tax currently cost him about $15 per month.
As another small-scale brewery, a two per cent tax hike will likely not hurt him.
Nonetheless, he wanted Ottawa to offer more tax breaks to small businesses instead of hikes.
“Any little break we can get in tax is better than paying it out. That being said, excise tax isn’t a lot for us,” said Leadbetter.
According to other media, the excise tax hike comes as Canadian brewers are already hurting from a fall in beer consumption over the last decade.
A Jan. 15 report by the Conference Board of Canada shows that the beer industry generated $13.8 billion in spending over 2016.
But Beer Canada says that 47 per cent of the price of beer is a government tax and it will keep going up and it has launched a petition to “Axe The Beer Tax.”
The tax is one of the world’s highest and it generated $5.7 billion in revenues for the government, according to Beer Canada.