The federal government recently announced an extension of financial relief for Canadian brewers, winemakers, and distillers by maintaining temporary measures that reduce duties charged to producers. Rebellion Brewing Company President and CEO Mark Heise explains what an excise duty is and what this announcement means for Saskatchewan beer producers.
What is an Excise Duty?
According to Heise, an excise duty is a tax charged to anyone who manufactures beer. For every litre of beer produced, the federal government takes a portion. While the government uses the term 'duty,' it is essentially a tax applied to spirits, wine, beer, tobacco, cannabis, and vaping products. This duty is paid on both domestically made and imported goods.
Heise notes that the provincial government imposes a similar charge on alcohol, referred to as a 'production levy.' However, the federal duty is significantly higher than what brewers pay to the province. Regardless of the terminology—tax, duty, or levy—the result is that beer producers are charged a specific rate by the government.
What Has the Federal Government Done?
The Canadian government previously offered temporary relief from this duty on a two-year basis, which was set to expire in March. Heise says that industry stakeholders lobbied the government, and he personally spoke with members of parliament. As a result, the government agreed to extend the relief for another two years.
According to a May 18 government news release, the extended measures include a two per cent cap on annual alcohol excise duty inflation adjustments and a 50 per cent reduction in excise duty rates on the first 15,000 hectolitres of beer brewed in Canada.
What Does This Mean for Brewers?
Heise explains that this extension absolutely helps with the bottom line, especially as businesses face rising costs for fuel and other expenses. Small businesses want to pay employees a living wage, but inflation has made that challenging. The excise duty relief is one lever the government can pull to ease financial pressures.
Heise emphasizes that the two per cent cap on excise duty inflation is less impactful for small breweries compared to the 50 per cent reduction in excise duty rates. This reduction will result in significant annual savings for Saskatchewan breweries.
Heise adds that these savings could allow breweries to hire additional staff, manage fuel costs, or offset rising power and energy expenses. 'Power and energy certainly isn’t getting any cheaper these days,' he notes. 'That helps offset some of those bills.'
