Once fearing a dramatic spike, Calgary bars and beer stores find small bump on alcohol tax palatable

An expected spike in the country’s alcohol excise tax was downgraded to a bump in Tuesday’s federal budget.

For bars, liquor stores, the craft brew industry and consumers, two per cent is much more palatable than 6.3 per cent.

For Andrew Arbuthnott, who owns Collective — A Craft Beer Shop, in southeast Calgary with his wife, Stacey, it was welcome news in the face of 12 months of inflation, which has affected the business and consumers.

“If all of a sudden you increase (the tax) by six per cent but you’re not getting anything more, you’re gonna purchase a little bit less. So, for us, that’s a very scary concept,” he said.

Collective relies on local suppliers and brewers to stock their shelves, and Arbuthnott said the start of 2023 has been rough.

January is always a slow month, but they didn’t see much improvement in February. Traffic started to pick up in March and they were banking on a strong return this spring, which the forecasted 6.3 per cent hike would have potentially hampered.

The two per cent cap for this year, Arbuthnott said, is much more manageable.

Blair Berdusco, executive director for the Alberta Small Brewers Association, said they had been lobbying the government for more predictability in the alcohol excise tax, as it is tied to inflation. The capped two per cent increase, which takes effect April 1, achieves this for at least 2023.

Breweries have seen costs of production go up 30 per cent on average. Most of those costs have been absorbed by the brewers, and a drop-in sales due to a tax increase would have been damaging to the sector.

“As an industry across Canada, we are working to communicate to the federal government a more progressive, revenue-neutral and just predictable rate schedule for the excise tax,” Berdusco said. “We are happy that it is capped at two per cent for this year, but we do have a much greater ask for an overall re-evaluation of how excise is evaluated and put into place in years to come.”

Restaurants Canada applauded the lower tax increase. They also liked the agreement with credit card companies to reduce interchange fees and the investment in the Canadian Tourism Growth Sector.

Still, it was hoping to see sector-specific supports to extend Canada Emergency Benefit Account repayments and changes to the Temporary Foreign Worker program to help address the labour shortage.

“The Canadian government missed the opportunity to save struggling small businesses from an uncertain fate,” Olivier Bourbeau, vice-president of federal and Québec affairs for Restaurants Canada, said in a news release.