e-3931 (Taxation)

The Government of Canada recognizes the significant contribution that the Canadian wineries, breweries, cideries and distilleries make to the national economy through job creation and sales of high-quality products. This is why the government implemented the Wine Sector Support Program, providing up to $166.2 million to Agriculture and Agri-Food Canada in the 2022-2023 and 2023-2024 fiscal years, to support wineries in adapting to ongoing and emerging challenges. Small- and medium-sized Canadian brewers currently benefit from lower excise duty rates on the first 75,000 hectolitres (1 hectolitre equals 100 litres) of beer produced per year. The Government of Canada included in Bill C-19 (Budget Implementation Act, 2022, No. 1), which received royal assent on June 23, 2022, the repeal of excise duty on non-alcoholic beer as of July 1, 2022, to encourage growth in this sector of the beer industry.

Alcohol excise duty rates are adjusted on an annual basis to account for inflation. The adjustments to excise duty rates do not generally represent an increase in real dollar terms – they are intended to preserve the effectiveness of the excise duties over time, to ensure that these duties continue to meet their policy objectives and to help avoid disproportionate ad hoc increases in the future. The 2022 inflation adjustment represents less than one third of a cent per can of beer, for example.

Indexation to inflation is a common feature of the tax and benefit systems, used in many other taxes, for example: the tobacco excise duties, income tax bracket thresholds, and the key tax credit amounts Canadians use when calculating their tax returns, such as the Basic Personal Amount and the Goods and Services Tax Credit. This practice is in line with many other countries that also annually adjust their alcohol taxes to account for inflation.