Canadian Brewers Ask Government to Stop Raising Taxes as Revenues Poised to Drop

A s many Canadian beer makers are pivoting to produce supplies and support Canada’s fight against COVID-19, they are now looking to government for some tax relief.

The United States and Germany have allowed brewers to delay monthly excise duty payments, while the United Kingdom has paused planned excise duty increases.

Canada’s federal government can do the same to help Canadian brewers, beer drinkers and the hospitality sector out. Brewers are asking the government to postpone monthly excise duty payments and to roll back the automatic excise duty increase that went into effect April 1.

It is simply not reasonable to introduce a tax increase that has the effect of taking precious cash flow from brewers hands and raising the cost of beer for Canadian beer drinkers and the struggling hospitality sector as it looks to bounce back from the devastating economic impacts of COVID-19.

Whether it’s the production of hand sanitizer for front-line workers, the donation of food to those who are most vulnerable, or supporting the restaurant and hospitality sector, there’s countless examples of how Canada’s beer industry has stepped up and contributed throughout this pandemic.

Many Canadian brewers are making these contributions as the future of their own businesses are uncertain. While there may have been a momentary uptick in beer sales in March, overall beer sales have continued to decline, according to Beer Canada’s latest industry trends report. Not to mention, brewers now find themselves entering what are traditionally the busiest months of the year with patios shutdown, and the cancellation of concerts, sporting events and other social gatherings that typically drive beer sales.

For a regional or mid-sized brewery (think Steam Whistle or Muskoka Brewery), the April 1 tax increase amounts to another $40,000-$50,000 in lost cash flow. That is on top of the estimated $150,000 a brewery of this size would already be remitting monthly to the federal government.

No other sector in Canada’s agri-food industry carries a tax that automatically increases annually despite the changes occurring in the industry’s operating environment. It is these facts that warrant the government to implement sector-specific measures to alleviate pressures on the beer industry and by extension, its large value chain.

Just as government leaders are asking landlords to defer rent for tenants, brewers are simply asking government to implement these measures for the same reason — so they can afford to pay their bills, pay their employees, and be in a position to continue contributing to the economy when this is all over.

Brewers support a large supply chain, contributing to the livelihoods of farmers, glass bottle makers, aluminum can manufacturers, distributors, truck drivers, warehouse workers, and countless others connected to the industry, as well as supporting tourism, hospitality and food service, and their employees.

Postponing the monthly payments of federal excise duty and rolling back the April 1 excise duty increase on beer are moves the government can make to provide room for brewing companies to maintain the cash flow needed to help keep their doors open, to pay staff and suppliers now, and their fair share of taxes in the future.