Liquor prices in Canada will increase 6.3% on April 1, thanks to the “annual escalator excise tax” implemented by the federal government in 2017.
It’s no April Fool’s joke. It’s another sneaky tax grab by the federal government.
Geared to inflation, the escalator tax allows the feds to automatically raise taxes on booze annually based on the Consumer Price Index.
When it was first introduced, inflation was running at about 2%, so consumers barely noticed it. Last year, it went up 2.4%. This year, with inflation soaring, the figure is 6.3%. Next year, who knows? The sky’s the limit.
The more inflation makes your life unaffordable, the more your government places your favourite tipple out of reach.
The campaign against the tax hike has even resurrected fictional characters Bob and Doug McKenzie. Actors Rick Moranis and Dave Thomas have brought back the original hosers to rally support support for Beer Canada in their fight against the tax grab.
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Canadians already pay too much for alcohol. Successive governments have latched on to “sin taxes” as a way to boost their coffers. They’re an easy target. This hike is the largest in 40 years.
This will add $125 million a year to the federal coffers, according to Dr. Sylvain Charlebois of Dalhousie University. He says Canada has the highest alcohol taxes among G7 countries and taxes alone account for about 50% of the price of beer, 65% of the price of wine and 75% of the price of spirits.
On the food industry website Retailer-Insider, he points out that hiking taxes this much could have the same outcome as increasing tobacco taxes to the stratosphere. While governments claim it’s done in the name of public health, the result is often quite different.
“Higher taxes may lead to an increase in illicit activities, as consumers seek out cheaper alternatives. For alcohol, this means bootlegging and smuggling,” says Charlebois.
That has consequences for health and safety.
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“Illicitly produced alcohol may be of lower quality and pose greater risks to consumers. This is not the road we need to take, especially now,” says Charlebois.
Bathtub gin, anyone?
This is yet another kick to consumers flattened by inflation.
In the immortal words of Bob and Doug: “We’ve been hosed.”
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