Since its inception in 2019 the CCBA has been lobbying the federal government, and specifically Finance Canada, to reduce the excise duty rates on beer. All other beverage alcohol sectors are doing the same.
This year the CCBA submitted a joint proposal to the House Standing Committee on Finance, in cooperation with the CCICB, a coalition of some of the country’s largest independent brewers. Our proposal recommended the following:
That the federal government introduce a new progressive excise rate schedule that allows breweries of all sizes to grow and prosper without the impediment of excessive taxation. This includes:
- Support for Small Craft Breweries During Their Pre-Profit Years
We recommend that the Government of Canada eliminate excise tax on the first 10,000 hectolitres of beer brewed by all breweries in Canada to accelerate the move to profitability for the 1,100 small-to-medium craft breweries in every province and territory in Canada.
- Removing Barriers to Growth for Emerging Large Craft Breweries
We recommend that the Government of Canada raise the annual production threshold for maximum excise rates from 75,000 hectolitres to 1,000,000 hectolitres to eliminate the “fiscal cliff” that presently disincentivizes growth for the 100 medium-to-large craft breweries in Canada that are attempting to scale in size to challenge the foreign-owned domestic producers for market share.
The House Finance Committee acknowledged the need to address the excise tax burden on Canadian craft alcohol producers. In its March 2022 report titled Considering The Path Forward, the committee recommended that the government adopt a progressive excise tax system, similar to the U.S. Craft Beverage Modernization and Tax Reform Act, to help small craft alcohol producers compete in Canada and abroad.
On April 7th Finance Minister Chrystia Freeland tabled a budget that did not include an overhaul of the excise tax system, but did propose to eliminate an inequity that currently exists in the excise structure. Budget 2022 proposes to eliminate excise duty on low-alcohol beer, effective as of July 1, 2022. This will bring the tax treatment of low-alcohol beer into line with the treatment of wine and spirits with the same alcohol content, and make Canada’s practices consistent with those in other G7 countries.
The CCBA will continue to push the federal government toward overall excise tax reform, helping smaller craft breweries reach operating profitability more quickly, and helping larger craft breweries fund the business growth necessary for them to compete against foreign-owned and imported beer for market share.