Several bottles of wine from the Northern Lights Estate Winery, one of several local businesses happy to see the federal government's tax cap

By Tommy Osborne

Alcohol tax

Local breweries and wineries celebrating tax increase cap

Mar 28, 2024 | 5:03 PM

PRINCE GEORGE – Local breweries and wineries will be enjoying lower than expected tax increases, as the federal government announced a two year extension on the annual alcohol excise duty inflation adjustment. This means for the next two years, the tax increase will be limited to just two percent. Excise tax is a legislated tax on specific goods or services, like alcohol, tobacco, and more.

“Two percent might not sound like a lot, but it actually is a big difference when everything has gone up so much, especially since Covid and with inflation. So the percent, it’s a real number for a small brewery,” said Trench Brewing Co-Owner Bailey Hoefels.

While capping the increase at two percent is definitely appreciated, Hoefels says it’s not world changing, and the brewery estimates that will save around 300 dollars a month. The real benefit for Trench is actually another cost saving measure from the federal government, being a 50 percent reduction for two years on excise duty rates for the first 15,000 hectolitres of beer. One hectolitre is equivalent to 100 litres, and Hoefels says Trench Brewing brewed around 2000 hectolitres last year.

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“We won’t even come close to 15,000 hectolitres in a year because we are a small brewery. We’re never going to run out of that tax break, right?”

With breweries and wineries able to operate on lower costs due to this tax cap, it also likely means cost increases on the customer will be much lower too, so both the business and its customers can enjoy keeping a bit more cash in their wallets.

“What we’re finding with this cap is the opportunity to reduce price increases that might otherwise hit people when they’re buying on the shelves. Generally we try not to pass on any increases on us to the customer. We try and absorb as much of that as possible. But in this case, it’s going to be a win so we can make sure that we reduce any further price increases that might happen through the year,” said Northern Lights Estate Winery Operating Partner Doug Bell.

The tax cap and 50 per cent reduction over two years on excise duty rates definitely help, it doesn’t address all the issues that local businesses have been struggling with for years around cost increases.

“Our excise tax is one of the smallest expenses that we have when it comes to making beer. Not that it (the tax cap) is not appreciated or the break isn’t great, but it probably isn’t our biggest expense,” said Hoefels.

“There’s been such an incremental increase, not just on taxes, but also on cost of supplies, bottles, labels, corks, a screw caps, all of those things. So every single little bit makes a big difference,” added Bell.

This tax cap was supposed to only last for one year, but this extension means it will stick around for at least two more years.

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