Why are alcohol prices going up in Canada?
Canadians have recently seen an increase in the price of their favourite alcoholic beverages. The bad news is that they are about to get even more expensive.
In 2017, the federal government came up with the brilliant idea of indexing alcoholic beverage taxes to match the rate of inflation. It's called an escalation alcohol tax. The idea was to make price spikes more predictable, but without any parliamentary oversight or consideration of the ever-changing market environment. No one was paying attention to the concerns of the alcohol industry.
Before the pandemic, inflation in Canada was not as noticeable as it is now. Few people noticed that alcohol taxes went up every year. But a shocking revelation awaited everyone this year, when the inflation rate jumped noticeably.
Almost a month from now, on April 1, the tax will increase by 6.3%, which will be the highest increase ever. Canadians will have to pay an additional $125 million a year in taxes on the purchase of beer, wine and/or spirits.
Canada already has the highest alcohol tax of all the G7 countries. In fact, taxes alone account for 50% of the price of beer, 65% of wine, and 75% of spirits.
Since the 2017 escalation alcohol tax, Canada has experienced five steep price increases, causing Canada to overtake Japan for the highest alcohol taxes in the world.
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