Langley brewery says annual beer tax hike hurts businesses

The owner of a prominent Langley brewery is one of a number in the industry calling for a roll-back of an annual increase in a federal tax on beer this year.

Derrick Smith, CEO of Dead Frog Brewery, said the excise duty on beer is the only tax that increases every year as a result of inflation.

“This is death by a thousand cuts,” Smith said. “No other tax does this.”

He noted that leaves breweries facing a choice every year – absorb the cost, or pass it along to their customers.

Beer Canada, an industry group, is asking that the tax be rolled back this year in the government’s next federal budget, which is expected this month.

“Continuing to raise taxes on beer in the middle of the pandemic is counterproductive to the government’s goal of supporting the recovery of Canada’s hardest-hit businesses, including restaurants and bars,” said Luke Chapman, interim president of Beer Canada. “The last thing Canadians need right now is higher taxes.”

The tax was introduced in March 2017 and automatically increases annually on April 1.

The tax is applied at the brewery level, so consumers don’t see it on their receipt at the liquor store or pub.

READ MORE: Langley’s Dead Frog Brewery offers free six packs to people on the front lines of COVID-19

The tax is coming as brewers are expecting to see a hit from restrictions rising across the country as COVID numbers spike in Canada’s most populous provinces. B.C., Quebec, and Ontario have all increased restrictions recently to halt the spread of the virus, including a ban on indoor dining again in B.C.

Smith noted that the tax increase will come as Dead Frog has had to shut down its tasting room to comply with the newly-tightened regulations.

“Bars and restaurants, in particular, have been very hard hit, and they’re going to need the support of all their suppliers – including beer manufacturers,” said Andrew Oland, President & CEO of Moosehead Breweries. “Brewers across the country are finding ways to provide support and help our bar and restaurant partners, but we need the government to step up and create conditions that allow us to continue supporting the recovery. Raising beer taxes does the exact opposite.”

Smith said that the Canadian Craft Brewery Association is also working have the excise duty removed completely from any brewer that produces less than 10,0000 hectolitres per year.

He estimates that would allow community based brewers to save and contribute up to $30,000 a year more into local economies.

Beer Canada’s ongoing campaign against the excise tax increase is dubbed the Freeze it for Them campaign, and has been gathering signatures at www.freezeitforthem.ca.