Federal alcohol tax hike set for April 1 draws criticism

The federal government is facing renewed criticism over an automatic increase to alcohol excise taxes scheduled to take effect April 1, with opponents arguing the move will add to affordability pressures for consumers and businesses.

The Canadian Taxpayers Federation is calling on Prime Minister Mark Carney to cancel the increase, which would raise federal taxes on beer, wine and spirits by two per cent.

“Canadians are struggling with the cost of everything and the federal government shouldn’t make taxpayers pay more for a cold one,” said Franco Terrazzano, the federation’s federal director. He said the increase would place additional strain on brewers, distillers, pubs and restaurants already dealing with rising costs.

The tax increase is part of the federal government’s alcohol “escalator tax,” first introduced in the 2017 federal budget. The policy automatically adjusts excise taxes on alcoholic beverages each year based on inflation, without requiring a vote in Parliament.

Industry estimates cited by the federation suggest the upcoming increase will cost taxpayers about $41 million in the 2026–27 fiscal year. Since the escalator tax was introduced, it has generated an estimated $1.6 billion in additional revenue.

Concerns have also been raised by workers in the brewing sector. In a letter sent to the federal government, unionized Canadian brewery workers warned that another automatic tax increase, combined with tariffs, rising input costs and stagnant sales, could lead to production cuts and job losses.

“At a time when Canadians are struggling with affordability and workers’ futures are uncertain, it is difficult to understand how another tax hike on a proudly Canadian manufacturing industry could be justified,” the letter said.

According to the federation, taxes imposed by multiple levels of government account for roughly half the retail price of alcohol in Canada.

Terrazzano said automatic tax increases undermine transparency and accountability. “If politicians think Canadians aren’t paying enough tax, they should at least have the spine to vote on the tax increase,” he said.

The federal government has not yet indicated whether it plans to pause or cancel the April 1 increase.