Eliminating the escalator tax on beer would be an easy, cost\u002Deffective win for a government that is accused of being aloof and remote.
But trying to convince voters that the government is trying to make their lives easier will be harder — particularly because Finance Minister Chrystia Freeland has already indicated her spring budget will be “mindful of our requirement not to pour fuel on the fire of inflation” and force the central bank to raise interest rates again.
A two per cent tax on beer, wine and spirits was introduced by then-finance minister Bill Morneau in 2017, with the additional proviso that prices would rise at the rate of inflation every year thereafter. Beer and other alcohol products are the only manufactured food products that are subject to tax rates adjusted automatically every year at the rate of inflation, absolving Parliament from voting on the issue.
The hospitality industry and brewers have lobbied Ottawa to freeze the escalator tax until inflation returns to the Bank of Canada range of one to three per cent, pointing out there are limits to rising production costs. Increased operating and raw material costs have already juiced prices — Statistics Canada says beer served in licensed establishments increased in price by 5.1 per cent in the year to December 2022, and by 6.9 per cent for beer purchased from stores.
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