The excise escalator tax increases federal alcohol excise duties automatically each year based on inflation, without parliamentary debate. While intended to simplify tax adjustments, this approach has had unintended consequences.

Canada’s wine industry supports over 45,000 Canadian jobs and supports approximately $11.6 billion in annual economic impact, while breweries contributed $2.9 billion and paid out $862 million in salaries and wages, and distilleries contributed $1.7 billion. Niagara is responsible for 90% of grape production in Ontario and is the largest wine producing region in Canada, making up 80% of Canada’s total grape and wine production.

Since its introduction in 2017, the escalator tax has resulted in compounded excise increases of over 18% and cost consumers over $900 million, even as the sector has struggled through the economic effects of COVID-19, extreme climate events, and rising input costs. For many small and mid-sized wineries already grappling with higher packaging, labour, and shipping expenses, this tax creates an unsustainable financial burden. For breweries, recent inflationary pressure has seen malt prices increase by 50%, the cost of aluminum cans by 20%, and carboard by 16%. 2023 saw the closure of 70 craft breweries in Canada. This was the first time that the industry shrank since Prohibition.

The escalator tax should be repealed and replaced with a fairer, more transparent excise policy that allows for parliamentary debate, industry consultation, and economic impact assessments.

2017-ongoing