‘Devastating blow’ for spirits sector in Canada Federal Budget

Pic:iStock/donfiore

Spirits Canada says it is ‘shocked and dismayed’ at an immediate increase in the federal excise duty for spirits, saying that manufacturers in the country already bear one of the highest tax burdens for spirits in the world. 

Announced yesterday, the federal Budget imposed an immediate increase in the federal excise duty on spirits from $11.696 per liter of absolute alcohol to $11.930 per liter of absolute alcohol.

The excise increase of around 7 cents per 750 ml bottle of 40% abv spirits will raise retail prices by 20 cents at retail for most brands, says Spirits Canada.

Increased excise duty ‘will lead to layoffs and plant closures’

Jan Westcott, president & CEO of Spirits Canada, said, "We are absolutely shocked and dismayed that the federal government has decided to saddle Canadian spirits manufacturers with higher taxes, knowing full well that such a decision will lead to more layoffs and plant closures.”

Over the past 10 years, federal excise duty revenues from spirits have increased by 50%, he added.

While representing 23% of the value of alcohol sales in Canada, spirits generate 45% of federal beverage alcohol excise duty revenues.

"Higher excise taxes will reduce industry investments in our plants and brands, force a scaling back of innovation, depress sales, reduce our grains' purchases from Canadian farms, and lower our new export market development,” added Westcott.

Canada’s spirits industry sustains more than 8,500 full time jobs across the country, contributing $5.8bn CAD ($4.3bn USD) a year to Canada’s GDP. The industry exports some $600m ($450m USD) of Canadian Whisky and other spirits: making up around two thirds of Canada’s annual alcoholic beverage exports. 

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