A local brewery is relieved the federal government reduced a planned alcohol tax increase in Tuesday's federal budget, but still has concerns about business in today’s market.
The federal government’s alcohol excise tax, which has its increases pegged to inflation, was set to climb by 6.3 per cent this year – the largest jump in 40 years.
However, the government revealed, during its budget presentation, the tax would be reduced to a 2 per cent hike, following outcry throughout the industry.
For Catherine Pearson, owner of Quayle’s Brewery in Oro-Medonte, the tax reduction is a positive development, although she hoped to see the government freeze the tax rate as many restaurants and breweries struggle in the post-COVID economy.
“It's a win that it’s not 6 per cent, but it's a loss (that) there's an increase,” she told OrilliaMatters. “The hope was that at least they freeze it until the Bank of Canada gets (inflation) back down to 1 to 3 per cent.
“This is not the time to be taxing the little guys. The sector is still recovering from COVID.”
With rapidly increasing costs of materials and manufacturing, as well as pandemic shutdowns not far in the past, Pearson said doing business in today’s market is far more difficult, and the alcohol excise tax simply adds additional burden.
Pearson said about half the cost of a can of beer is wrapped up in taxes.
“Everything's increased, it is across the board, from … labels, cans, all the raw materials, labour, transportation, energy – every day I'm getting price increases,” she said. “At the end of the day, I mean, consumers are going to face this, whether they're eating at restaurants, (or) they're going to the liquor store and buying a drink.
“There’s only so much you can draw out of a stone.”
Pearson opened her brewery amid the pandemic in 2020, and she has diversified her business in order to thrive. On top of brewing craft beer, her business has a restaurant and hosts weddings and special events.
That said, she does not think all businesses will be able to weather the current market and tax increase.
“We've got consumers who are obviously dealing with inflation and less money to spend, but as a business, where you can only draw so much out, I think we're going to see a lot of (businesses) not survive,” she said. “Anybody who sells alcohol is going to be impacted by this.”
