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Niagara brewer wants tax reform to support craft beer makers

Craft brewing is the fastest growing segment of Ontario’s manufacturing sector, generating $683M of economic activity annually and employing more than 11,000 people
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The debate on beer tax is reaching a foamy head, as taxes are set to increase in the next few months.

As the federal escalator tax is set to rise, coupled with the thawing of the province’s beer tax freeze, one west Niagara brewer is asking for a complete reform of the tax system to unleash the potential of the province’s small breweries.

Griffin Data, president of Newark Brewing in Beamsville, said although high taxes are part and parcel of the industry, changes to how craft brewers are taxed would be welcomed.

“Coming into this industry, you know that high taxes are kind of the nature of the beast,” he said. “But as far as craft brewers go, I think a full reform on the tax is a bit past due.”

For Data, small breweries like his are important players in communities, providing jobs. While larger breweries can rely on automation for production, smaller players need people to do the work.

And Data thinks tax reform should reward that, by giving more tax breaks to small breweries. That’s especially true given the state of the economy.

“Any time there's talk about a tax increase, I feel like we're probably in the worst economical situation we've been in since probably 2008,” he said. “So, (tax hikes) should be kind of scrapped … for the short term.”

That’s echoed by Scott Simmons, president of the Ontario Craft Brewers (OCB), which represents breweries across the province.

At a provincial level, Simmons wants a continuation of the Ford government’s beer tax freeze, which is currently due to end on Feb. 28, but also to go further.

“Ontario’s craft beer sector is a critical part of our economy, and the Ford government freezing the beer tax over the past two years was crucial to helping it survive during the pandemic — and much appreciated by breweries across the province,” he said.

“The lingering impacts of the pandemic are still being felt in craft beer so the OCB is calling on the government to continue the freeze, but we believe more can and must be done to unleash the next phase of craft beer’s growth in Ontario.”

A study by the Canadian Centre for Economic Analysis (CANCEA), with help from OCB, discovered how important craft brewing is to the province’s economy.

A report, published in November 2022, found craft brewing is the fastest growing segment of Ontario’s manufacturing sector, generating $683 million of economic activity annually and employing more than 11,000 people.

However, craft breweries have incurred a 35 per cent greater increase in Ontario’s beer basic tax rate when compared to internationally-owned brewing companies since 2010. This, the report stated, limits craft brewers’ ability to invest in their breweries, employees, and communities.

At the national level, the federal government is due to implement the latest escalator tax increase on alcohol on April 1, but Canada Craft Brewers Association (CCBA) is calling on a reform to the system.

“The last (few) years, with social distancing measures, supply chain disruptions and now the costs of everything soaring, it means our local craft breweries need a break,” said Christine Comeau, executive director of CCBA.

“We are asking the federal government to reform the current outdated excise tax structure, to create a system that supports Canada’s smaller and struggling craft breweries. While some of the largest breweries are asking for a moratorium on the escalator tax, we don’t see that as fixing the problem; instead we are asking for complete reform.”

Niagara West MPP Sam Oosterhoff said the beer tax freeze helped support the local beverage sector.

“The province cancelled a beer tax increase in 2018, which would have increased rates by three cents per litre,” he said. “The government also delayed resuming beer tax rates increases by an annual indexation factor to March 1, 2023.

“These actions will keep more money in consumers' pockets and support our local beverage alcohol sector while the government continues to review how beer and wine is sold in Ontario.”

Chris Pickles is a Local Journalism Initiative Reporter at Niagara This Week. The Local Journalism Initiative is funded by the government of Canada.