End Automatic Increases to Alcohol Excise

Summary#

This bill would stop the automatic yearly increases to federal excise duties on beer, malt liquor, wine, and spirits. It repeals the indexation provisions in the Excise Act and the Excise Act, 2001, and sets fixed duty and penalty rates. The changes apply to the 2022 and later taxation years (Bill: applies to 2022+).

• Ends annual CPI-based adjustments by repealing Excise Act s.170.2 and Excise Act, 2001 ss.123.1 and 135.1.
• Sets fixed duty rates for beer by strength, with graduated (lower) rates for the first 75,000 hectolitres brewed in Canada (Bill: Schedule II and II.1).
• Sets fixed duty rates for wine by strength and for spirits by litre of pure alcohol (Bill: Schedules 4 and 6).
• Updates related penalty amounts to fixed per‑litre figures (Bill: ss.217, 218, 242, 243, 243.1).
• Applies to tax years starting in 2022, which could change amounts owed for past periods (Bill: application clause).

What it means for you#

• Households

  • No more automatic yearly increases to the federal excise duty on alcohol. Any future change would need a new law (Bill: repeals indexation provisions).
  • Approximate excise duty embedded in common products under this bill:
    • Beer (>2.5% ABV): $31.22 per hectolitre = about $0.11 per 355 mL can; about $2.68 per 24‑pack of 355 mL (Bill: Schedule II).
    • Wine (>7% ABV): $0.62 per litre = about $0.47 per 750 mL bottle (Bill: Schedule 6).
    • Wine (1.2–7% ABV): $0.295 per litre = about $0.22 per 750 mL (Bill: Schedule 6).
    • Spirits: $11.696 per litre of pure alcohol. A 750 mL bottle at 40% ABV is about $3.51 in excise duty (Bill: Schedule 4).
  • Shelf prices also include provincial markups, sales taxes, and business pricing. The bill does not change those. Whether shelf prices change depends on producer and retailer decisions. Data unavailable.

• Breweries and distilleries

  • Federal excise duty rates are fixed at the amounts in the bill. There will be no automatic CPI increases each year (Bill: repeals Excise Act s.170.2; Excise Act, 2001 ss.123.1, 135.1).
  • Small brewers keep graduated rates on the first 75,000 hectolitres brewed in Canada, set at fixed amounts by volume and strength (Bill: Schedule II.1).
  • Compliance processes stay the same. Penalties for certain contraventions are set to fixed dollar amounts per litre, not indexed (Bill: ss.217, 218, 242–243.1).

• Wineries and importers

  • Wine duty rates are fixed by strength at $0.0205, $0.295, or $0.62 per litre, depending on alcohol content (Bill: Schedule 6).
  • Importers continue to pay excise at these fixed rates on entered goods. No automatic increases (Bill: repeals indexation provisions).

• Restaurants, bars, and retailers

  • Your wholesale costs will no longer rise automatically due to federal excise indexation. Other input costs and provincial policies are unchanged. Any pass‑through to menu prices is a business choice. Data unavailable.

• Local and provincial governments

  • No direct change to provincial markups, licensing, or enforcement. The bill affects only federal excise duties and related federal penalties (Bill text).

Expenses#

• Estimated net impact: Data unavailable.

• Key points

  • No official fiscal note identified. Data unavailable.
  • The bill removes automatic CPI-based increases and fixes duty and penalty rates starting in 2022 (Bill: application clause; repeals indexation sections).
  • This would reduce projected federal excise revenue compared to current law that includes annual indexation. The amount depends on inflation rates and alcohol sales volumes. Data unavailable.
  • Applying changes to 2022 onward could require reassessments of amounts already paid or assessed. Administrative impact and any refunds or collections: Data unavailable.

Proponents' View#

• Restores parliamentary oversight of tax changes by ending automatic increases; future adjustments would require a vote (Bill: repeals Excise Act s.170.2; Excise Act, 2001 ss.123.1, 135.1).
• Provides cost certainty to producers and consumers by fixing rates instead of increasing them annually (Bill: Schedules II, II.1, 4, 6).
• Supports small breweries with clear, fixed reduced rates on the first 75,000 hectolitres, aiding planning and investment (Bill: Schedule II.1).
• Limits inflationary pressure that comes from automatic tax indexation on widely purchased goods like beer and wine; for example, a 24‑pack of 355 mL beer cans includes about $2.68 in federal excise duty under the bill, which would not rise automatically (Bill: Schedule II).
• Simplifies enforcement by aligning penalty amounts to fixed per‑litre values, removing annual recalculations (Bill: ss.217, 218, 242–243.1).

Opponents' View#

• Reduces federal revenues over time relative to indexed rates, as duties will not keep pace with inflation; this may increase deficits or require other taxes or spending cuts. Quantified impact: Data unavailable (Bill: repeals indexation provisions).
• Weakens public health pricing tools that maintain real alcohol prices via indexation; fixed rates lose value in real terms without periodic legislative updates. Quantified effects: Data unavailable (Bill: fixes rates; repeals indexation).
• Retroactive application to 2022 could create administrative burdens for producers and the Canada Revenue Agency, including reassessments and possible refunds or payables. Scale: Data unavailable (Bill: application clause).
• Fixed penalty amounts may erode as a deterrent over time if not updated, as they would no longer adjust with inflation (Bill: ss.217, 218, 242–243.1).
• Creates a need for more frequent legislative changes to maintain real revenue and deterrence, which may be uncertain or delayed (Bill: repeals automatic adjustments).