If the federal government wants to support the recovery of our restaurant and hospitality businesses, they must get rid of the alcohol escalator tax
In August, Prime Minister Trudeau responded to a question about potential tax increases to pay for pandemic spending by stating, “The last thing Canadians need to see is a rise in taxes right now.”
Despite the Prime Minister’s statement, back on April 1, the federal government did increase taxes on Canadians’ favorite beer, wine and spirits through the alcohol escalator tax. Now, as our local restaurants and bars continue to struggle due to the ongoing impacts of the COVID-19 pandemic this tax is scheduled increase again on April 1, 2021 – this is no April fool’s joke.
The alcohol escalator tax is a tax grab that the federal government introduced in Budget 2017 when the government decided that, going forward, excise duty taxes on beer, wine and spirits would automatically increase every year, forever on April 1.
When the measure was first proposed, Canadian brewers, wineries and distillers indicated to the government it was a bad idea to impose an automatic, permanent tax increase mechanism that would not take into account economic conditions. Fast forward to 2020 and it turns out the concerns were well founded.
The impacts of the COVID-19 pandemic have been especially devastating to the hospitality industry in Sault Ste. Marie including the bars and restaurants that rely on alcohol sales. Things are so bad that a Canadian Chamber of Commerce survey found that nearly 60% of Canadian restaurants could fail within the next three months.
It is, without a doubt, the worst time to force these businesses to raise the prices of alcohol, yet the escalator tax scheduled to increase the excise duty will do exactly that on April 1, 2021. As the federal government considers what measures are required to support Canada’s economic recovery, it should repeal the escalator tax to protect Canada’s restaurants, bars and producers from this punitive tax increase.
The hurting hospitality sector in Sault Ste. Marie agrees with the Prime Minister that the last thing Canadians need to see is a raise in taxes right now. It is time for the government’s actions to match those words by repealing the alcohol escalator tax this fall.
Rory Ring, CEO
Sault Ste. Marie Chamber of Commerce