Canada is set for its largest alcohol tax increase yet. Here’s what to know

Canadians could soon be paying around a quarter more for a 24-pack of beer thanks to the largest increase yet in a federal tax on alcohol.

Canadians could soon be paying around a quarter more for a 24-pack of beer thanks to the largest increase yet in a federal tax on alcohol.

The “escalator tax” is set to increase by 6.4 per cent on April 1 unless a change is announced before then, such as when the federal budget is revealed on March 28, according to food distribution professor at Dalhousie University, Sylvain Charlebois.

Charlebois told Global News that the tax, which was introduced in 2017, was designed to automatically increase over time based on the rate of inflation to avoid renegotiating it too often.

Given the amount of inflation Canada has experienced recently, the tax is now set for its biggest increase ever, he noted. Last year, the tax went up 2.4 per cent.

And while a penny a beer might not sound like much of a hike, industry experts say it’s one more factor pushing up costs for producers and distributors that’s likely to have ripple effects on what consumers pay.

Charlebois predicts the tax will increase the price of a single beer by one cent, while the finance ministry told Global News in a statement said that the amount would be three-quarters of a cent. Charlebois said that the price increase would be visible immediately after the tax is scheduled to be implemented on April 1.

Beer Canada told Global News in a statement that the tax increase will bring up the price of a 12-pack by 10 cents. For a 750 ml bottle of wine, the price could increase close to three cents, according to figures from the Canadian Revenue Agency.

In a statement to the Canadian Press, the Liquor Control Board of Ontario (LCBO) said that a 750 ml bottle of a spirit of 40 per cent alcohol by volume (ABV) may increase 70 cents. Charlebois said that the tax may have a smaller impact on the price of craft beer since it is lower volume and usually at a higher price, but could affect larger manufacturers more.