Hon. Peter Bethlenfalvy Minister of Finance
Frost Building South 7th Floor, 7 Queen’s Park Cres,
Toronto, ON M7A 1Y7
Dear Minister Bethlenfalvy,
We are writing to you today as leaders in the beverage alcohol, retail and hospitality sectors in strong support of the Ontario Craft Brewers’ (OCB) call to reform Ontario’s beer tax system as outlined below to support our businesses and the future growth of our craft beer sector.
Ensuring Ontario’s craft brewing industry continues to grow is vitally important for all our sectors. Here’s why. Ontario has over 340 craft breweries, which in turn now employ 4,600 people, representing 80% of all brewing jobs in Ontario. It also generates a tremendous benefit for our tourism sector, attracting over 5 million visitors per year. There are now craft breweries in literally every Ontario community who, in turn, contribute $685 million to the provincial economy and supports thousands of good jobs and invest in their local communities.
It is critical for our province that this growth continue, however, the current beer tax system is one of the biggest things holding it back – and something government can and should take action to fix.
While the current tax structure was helpful in allowing new breweries to enter the market, the inherent flaws and unintended consequences in the tax system have restricted craft brewery’s growth over the past decade and is now holding the entire sector back.
A strong tax system that supports our local craft breweries and its local supply chain has never been more important as the craft beer sector and all our industries try to recover from the pandemic. The reality is that a shift in consumer behaviours resulting from public health restrictions during COVID, as well as the ongoing impacts of inflation, and increased costs have had an impact on every part of our businesses. The sector sincerely appreciated many of the measures taken by your government to support our various industries during pandemic, however its lingering impacts are still very much being felt every day.
If the government acts quickly to reform our province’s antiquated beer tax structure Ontario’s craft beer industry could be bigger and stronger than ever. In fact, a recent study by the Canadian Centre for Economic Analysis (CANCEA) found Ontario’s craft beer industry could grow by a minimum of another 40%, and in turn create 1,000 new jobs, $380 million in capital investment, and $2.35 billion in economic activity if the right tax changes are implemented.
SUMMARY OF RECOMMENDATIONS:
Ontario’s beer tax system must be changed to allow Ontario-made craft brewers to survive, grow and remain Ontario-owned and operated. We, therefore, respectfully urge you to undertake necessary reforms of Ontario’s beer tax system by:
1) Replacing the outdated flat, microbrewery tax rate, as well as the small brewers’ manufacturers rebate program with a new consolidated, progressive beer tax that starts at much lower rates for microbrewers and then rises slowly and proportionately until maximum rates are reached;
2) Making the lower rate schedule only available to bricks-and-mortar breweries; and,
3) Eliminating the punitive 8.9 cent per can, beer can tax for all small brewers in Ontario.
Provinces such as British Columbia and Alberta made these changes years ago, and there is no disputing the evidence. These changes led to tremendous growth in the local, craft beer industries, which in turn has created new economic benefits to both provinces.
This is a pivotal moment for Ontario’s economy and the Ontario-made craft beer manufacturing sector which contributes thousands of jobs, capital investment, and economic benefit – not to mention culture and character – to communities across the province. The success of local craft breweries will also be bolstered by additional points of sale, like convenience stores, which will create growth opportunities and create good-paying jobs in communities across the province.
Craft breweries are ready to grow and thrive and need these changes to get past the recent economic turmoil. By implementing these effective, low-cost changes to Ontario’s beer tax structure the 300+ Ontario craft breweries can continue to grow. This in turn will result in a massive amount of new economic activity, job creation and tax revenue that would support Ontario’s local beverage alcohol, hospitality and retail sectors enormously at a time when it is needed most. We urge you to act now.
Thank you for your consideration.
Letter submitted by: Ontario Craft Brewers, Canadian Craft Brewers Association, Ontario Convenience Store Association, Convenience Industry Council of Canada, Canadian Federation of Independent Business, Ontario Restaurant, Hotel & Motel Association, Tourism Industry Association of Ontario, Ontario Hop Growers Association, Farmers Markets Ontario, Culinary Tourism Alliance, Thunder Bay Chamber of Commerce, North Bay & District Chamber of Commerce, Hamilton Chamber of Commerce, London Chamber of Commerce