Local brewers face uphill battle as alcohol tax looms: Andrew Coppolino

Counterpoint Brewing Company owner Graeme Kobayashi isn't sure government bodies understand the nuances of the current business climate that food-and-beverage companies continue to face.

"I feel like the government is acting as though economic times for the hospitality industry are back to normal, yet we're far from back to normal," says Kobayashi.

The Kitchener nano-brewery says loans that helped businesses during the pandemic need to be re-paid.

Couple that with a scheduled tax increase and guidelines encouraging people to cut back on their alcohol consumption, brewers are facing a difficult commercial environment.

In January, The Canadian Centre on Substance Use and Addiction published a continuum of risk associated with weekly alcohol consumption and identified standard drink levels at which risk goes from low to highest.

Add to that a 6.3% federal "escalator" excise tax on those beverages kicks in April 1. It's part of a combination of events that will put more pressure on the food and hospitality industry.

"We're looking at higher labour costs but also packaging costs that have increased immensely along with the rising cost of our ingredients," Kobayashi says.

The beverage alcohol sector is a major employer in Ontario (and Canada) driving billions of dollars into the economy and filling federal and provincial coffers with tax dollars.

The new consumption guidelines and the tax could modify how much alcohol people drink, according to professor Jacob Shelley in the faculties of law and health sciences at Western University.

"When there are efforts that attack the same problem from  multiple angles, it informs the consumer more if it was just one intervention," says Shelley who heads the Health, Ethics Law and Policy Lab at Western.

"A tax hike on its own might have an impact on one consumption pattern for financial reasons, but combining that with information on the risks associated with alcohol consumption, that have largely been misunderstood or unknown by a lot of people, and suddenly people might go, well it costs more but maybe I should be drinking less anyway," Shelley says.

He suspects that drinking habits could shift because information aligns on "multiple fronts."

When it comes to the escalator tax, there is some misinformation as presented by tax watchdogs and lobby groups who say the tax will add significant cost to your alcoholic beverages in order to proclaim a "taxation without representation" critique.

While it is true that the escalator tax, instituted in 2017 by the Liberal government, slips into effect quietly each year without going through Parliament and is based on the Consumer Price Index, it's just one of several factors that continue to put pressure on the industry.