Canada’s 2017 Federal Budget, proposes a 2% increase in the excise duty on Canada’s highest value added products –wine, beer and spirits. Hidden below the surface, is the fact the government wants to amend the Excise Act to legislate the annual indexation of wine, beer and spirits excise duty to the Canadian Price Index (CPI) effective April 1, 2018. In other words, it wants to increase the rate every year.

Ultimately, the consumer pays the tax. True, this alcohol manufacturer’s tax hurts the hospitality industry – the restaurants, pubs, hotels, golf clubs, halls and bars who offer you alcohol. But, as with all businesses, costs are ultimately paid by consumers – a fact of life most of us understand and respect.

And, in the case of restaurants and pubs and bars and hotels and wineries and ….this escalated excise tax on alcohol really impacts – negatively – their operations, including (especially?) the small neighbourhood establishments we all love to visit.

(Side’bar’ : “The excise tax increases will be added to the base price of all alcohol products and provincial mark-ups, levies and fees. Provincial and federal sales taxes will be layered on top. Customers won’t see this escalating tax, but it will significantly increase the price they pay for beer, wine and spirits once the cumulative effect of liquor board markups, GST and PST are added in.” Source: RestaurantsCanada.org)

While we all know alcohol is already one of the most highly taxed commodities in Canada, and, to some extent, have come to expect these government measures, there does come a point where people say “Ok,…enough is enough”. A lot of us (myself included) work in the sectors most affected – tourism, hospitality, food services, catering, event planning… the list goes on – and we know increased costs are problematic, particularly where margins are thin to begin with. A lot of the people I work with, on a daily basis, are small independent entrepreneurs, owners and operators, they, their families, their employees (and their customers) feel this type of tax the most, and the impact is both immediate, and personal.

The real damning point in all of this is the ‘Escalator Clause’. A tax that keeps on increasing every year, forever, without debate? That’s just wrong. And frankly, the lack of consultation and consideration on this automated, automatic tax increase is disappointing, to say the least, for a government that prides itself on consultation.

That said, there’s still time – croyez vous ou non – to ‘stop the tax’. Or, at least, stop the escalator clause associated with the tax. The government must subject the federal budget legislation to review. That’s underway now, but doesn’t last long. My sense is our MPs – of all stripes – don’t like the escalator clause. If you feel like making your voice heard on this, and letting your MP know how you feel, look them up here and contact them today. Thank you.

Paul McKay is a Consultant @ restaurantscanada.org