The Canadian government has temporarily capped the inflation adjustment for excise tax on alcohol at 2% for one year from April 1, 2023, instead of a planned 6.3% rise.
Spirits Canada, a trade body, said the decision was a compromise based on the recommendation of the Standing Committee on Finance to freeze the automatic excise increase for two years.
The government has implemented automatic annual tax increases on alcohol since 2017 based on the Consumer Price Index (CPI).
- The FINA called for a freeze on the tax until inflation returns to the 1% to 3% target range.
- Canadian distillers support 8,500 full-time jobs and contribute CA$5.8 B ($4.28B) annually in gross domestic profit, with exports worth over CA$660M ($487m).
- Spirits Canada's president and CEO, Jan Westcott, said the capped increase was a step in the right direction considering the record-high inflation.
Rising costs have led just over one in five consumers in Canada to plan to reduce their visits to the on-trade for the rest of 2022.
