Canada's restaurant industry is bracing for the biggest jump in the country's alcohol excise duty in more than 40 years, spurring warnings the tax hike could force some bars and restaurants out of business.
"Any increase at this very vulnerable time for our industry is just another blow while we're down," said Brenda O’Reilly, the owner of multiple restaurants and a brewery in St. John's, N.L.
"It's like death by a thousand cuts."
Bar and eatery operators across Canada have endured lockdowns, labour shortages, supply chain mayhem and soaring costs for everything from payroll to cooking oil. Rising inflation has also softened demand as some consumers stay home to save money.
"Many of us haven't recovered from the pandemic and now they want to raise this tax," she said. "It's hard to get blood out of a turnip. We'll see more restaurant closures if this goes ahead."
The federal beverage alcohol duty is set to increase 6.3 per cent on April 1.
Alcohol excise duties are imposed at the manufacturing level and adjusted annually based on inflation.
While the duty is separate from provincial liquor board fees and sales taxes, it ultimately filters down to higher prices for consumers, said CJ Hélie, the president of Beer Canada.
The automatic annual tax increase is a long-standing irritant for the beverage industry, but was "digestible" when inflation was around two per cent, Hélie said.
But this year's adjustment is more than triple the usual increase and should be reconsidered given the state of the industry, he said.
At the retail level, the higher alcohol duty is expected to range from about penny on a can of beer to much more on a bottle of spirits.
The Liquor Control Board of Ontario says a 750 ml bottle or a six-pack of beer may increase by about five to 10 cents, while a bottle of hard alcohol could increase by as much as 70 cents.