The Hon. Chrystia Freeland
Department of Finance Canada
90 Elgin Street
Ottawa, Ontario K1A 0A6
Dear Minister Freeland:
EXCISE DUTY ESCALATOR ON BEER, WINE & SPIRITS
The Thunder Bay Chamber of Commerce represents nearly 800 Member businesses and their 20,000+ employees. We are writing on behalf of local beer producers and the restaurants and hospitality businesses across our region that depend on the sale of their products. We join our colleagues at the London Chamber of Commerce in requesting that the Government of Canada suspend the alcohol escalator tax for the next two years, or until inflation normalizes. If the escalator is not suspended, the annual tax increases will have a devastating effect on these businesses.
As you know, Canada already has some of the highest alcohol taxes in the world and the alcohol escalator tax has built-in increases which occur every April. The annual increase is tied to inflation and is based on calculations that run from September to September. In a typical year, this increase is between 1.0 and 2.4%, however this year we have seen significant inflation and the tax increase in 2023 is forecast to be between 5.9% and 6.5%. Such an increase would extract an estimated $130 million in new taxes from Canada’s beer, wine and spirits sector in 2023 alone and could have a catastrophic effect on beer, wine and spirits producers. It will also have a knock-on effect on the restaurant and hospitality sector and will ultimately impact consumers who are already experiencing extraordinary price increases at the cash register.
At a time when governments at all levels are looking for ways to reduce the tax burden on Canadians, we think our request is both reasonable and timely. Thank you for considering this request and we look forward to your response.
c. Hon. Patty Hajdu, MP Thunder Bay-Superior North
Marcus Powlowski, MP Thunder Bay-Rainy River