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Ottawa Places Cap On Alcohol Taxes

Canada’s federal government in Ottawa is capping the tax increase on alcohol across the country.

The government of Prime Minister Justin Trudeau is placing a cap on the excise taxes charged on domestically produced beer, wine and spirits at 2% in each of the next two years.

The move by officials in Ottawa comes ahead of an April 1 deadline that would have seen the excise taxes charged on alcohol increase to 4.7% a year moving forward.

The increased taxes levied on brewers in Canada would have almost certainly been passed down to consumers in the form of higher prices for beer and other alcoholic beverages, something the federal government has sought to avoid amid high inflation.

Additionally, Ottawa said that it will cut by half the excise duty rate on the first 264,150 cases of beer brewed in Canada over the next two years.

That change is aimed at providing smaller craft brewers with about $87,000 in annual tax relief, said the government. More than 90% of Canadian brewers are in the “craft” category.

The changes will cost the government $153 million over two years, though the proposed changes still need to be passed in Parliament.

Excise taxes are imposed on alcohol and tobacco products produced within Canada and are charged at the time the products are packaged.

The tax changes introduced by the government in Ottawa come after heavy lobbying by the beer industry, which has argued for government relief amid rampant inflation in recent years.