Beer tax hikes will force out some craft beer, industry group says

Recent changes to the way Alberta levies taxes on beer are threatening to put several small importing companies out of business, an industry association says.

In last month's budget, the province hiked the tax on liquor by five per cent, or about $0.21 for a case of beer.

• Beer tax hikes push Ontario's Muskoka Brewery out of Alberta
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But that increase only applies to imported beer and beer producers making more than 200,000 hectolitres.

In a letter to Alberta Finance Minister Joe Ceci, Alberta Small Import Agencies spokesman Bo Vitanov says the new tax for the smallest import craft beers went up from $0.20 to $1.25 per litre overnight.

"The new beer mark-up will assist the 18 Alberta Small Brewers Association members, but unfortunately it will impact our agencies negatively, and the majority of these small businesses will not be able to survive," she says in the letter.

"By eliminating the transition level of the beer mark-up, the imported beer from small breweries across the world will be taxed at the same level of multinational companies that brew hundreds of thousands of hectoliters and own over 95 per cent of the Canadian market."

Vitanov sent a copy of the letter to Opposition Leader Brian Jean and all other members of the Legislature.

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Of the 3,455 beers imported by the group's 110 agents, more than three quarters went up in price under the new tax structure, Vitanov says.

Ceci defends changes

"Our intent is to grow the brewery business in Alberta and to create jobs and to diversify the economy," Ceci told CBC News.  

"We want to incent the Alberta craft brewers. Their decision is obviously up to them, and disappointing, but we have a great selection of products here, 20,000 at last count, and I think we're going to be OK." 

On Monday, Ontario-based Muskoka Brewery — a member of the Alberta Small Import Agencies — announced it will pull its beer from provincial shelves because of the new tax regime.

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Under the old system, Muskoka paid a tax rate of 40 cents per litre based on its production. It now faces a rate of $1.25 per litre, or an increase of 212.5 per cent.

Brewer support

Ceci said the changes reflect rules across Canada that put Albert craft brewers at a disadvantage. 

"It's not an equal playing field all across the country. There are disincentives for Alberta production in other parts of Canada. What we're doing is trying to incent Alberta production and to grow that industry and I think we're making the right decision."

Calgary-based Tool Shed Brewing Company has cheered the new tax regime, as well as Last Best Brewing and Distilling based in Alberta.

Tool Shed co-founder Graham Sherman told CBC News last month the changes mean his brewery will no longer have to cap its production.

Until now, many Alberta beer brewers capped their production at 19,999 hectolitres because if they made 20,000 or more, the tax per litre would more than double.