Tax freeze welcomed by craft breweries

By Sandi Krasowski
Local Journalism Initiative Reporter
The Chronicle-Journal

The Ontario government has put a freeze on the 4.6-per cent Ontario beer basic-tax increase and LCBO markup rates scheduled to go into effect on March 1.

The freeze will be in place for two years, until March 1, 2026, and Thunder Bay breweries are relieved.
George Renner, owner of Dawson Trail Craft Brewery, says the decision makes things easier going forward.

“There’s been a lot of challenges in our industry and we’ve seen a lot of closures,” Renner said. “For me, it makes life a lot less challenging, especially since a lot of our other input costs have increased.”

He pointed out that his company needs to stay competitive with larger craft breweries and “monolith” domestic breweries.

“When the taxes go up, the smaller breweries like us are impacted more than the larger domestics because it’s a scale game,” Renner said. “Things work differently at our scale. It’s difficult and has a bigger impact.”

Renner says rising costs can be passed on to the consumer, who will only tolerate so much.

The Ontario tax rates are lowered for smaller craft breweries and any increases or reductions in the rate are reflected in the reduced rates as well.

“Our provincial tax is quite high relative to other provinces and the fact that it’s been frozen is good,” he said.

CJ Helie, president of Beer Canada, said 46 per cent of the price of beer is taxes, leaving Ontario with the highest beer tax rates across the country.

This week, a unanimous motion was passed by the House of Commons Standing Committee on Finance (FINA) to reduce the scheduled 4.7 per cent inflation-based indexing of beer, wine and spirits taxes with a lower two per cent increase, in line with the Bank of Canada’s consumer price index mid-range target.

Helie said Beer Canada, which advocates for breweries, is now calling for a concurrence debate in the full House of Commons on the motion.

“This is so that all Members of Parliament may have their voice heard on this important issue to Canadian beer lovers, as well as to all those who brew, distribute, retail, pour or serve it,” he said.

The Ontario Craft Brewers is an advocating body that represents local craft breweries in communities across the province.

Kevin Brewer, general manager of the Sleeping Giant Brewing Co., said costs are soaring and the cost of their malt has grown more than 100 per cent in the last three years.

“Every time we have an increase, we have to look at how we can continue to make the product the same and not have to charge more,” he said. “We have a system or a formula, where we pay our staff and keep the lights and this tax freeze just allows us to keep the status quo,” he said.

“I don’t need to raise prices. I don’t need to look at other ways to garner revenue because now we don’t have to pay (4.7) per cent more on everything that we sell. It’s less debilitating.”

Brewer said the next step is eliminating the 8.9 per cent beer can tax.