By FRANCO TERRAZZANO and CARSON BINDA
Prime Minister Justin Trudeau has a habit of saying he’s “working to make life more affordable.”
But instead of doing the one thing that would immediately make life more affordable – cutting taxes – he’s using inflation to binge on higher alcohol taxes.
Trudeau is set to raise his federal excise tax on alcohol again in 2024. This time by 4.7%.
But even a 4.7% tax hike downplays how much tax you pay every time you go to the liquor store.
Taxes in Canada already make up about half the price of beer, two-thirds of the price of wine and more than three-quarters of the price of spirits.
That means if you buy a 24-pack of pilsner, a couple bottles of Pinot and a bottle of vodka, you can expect to pay about $120. More than $75 of that is tax.
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In fact, Canadians pay five times more tax on a case of beer than our friends south of the border. In Saskatchewan, Prince Edward Island, and Newfoundland and Labrador the tax on a case of beer costs more than the total price of a case in half of American states.
While Canadians are paying higher taxes, Americans are enjoying tax cuts. From 2017 to 2019, Canadian beer taxes went up $34 million for large brewers while American beer taxes went down down by $31 million.
The feds have been bingeing on alcohol tax hikes since the 2017 budget. That year, the Trudeau government introduced an automatic tax hike escalator. That means the federal excise tax automatically increases with inflation every year on April 1.
With inflation having reached a 40-year high, Canadians are facing a steep tax hike in 2024.
When the escalator tax was first introduced, there wasn’t much of a fuss because inflation was lower. But even small tax hikes can become big bills over time. After next year’s tax hike, the federal government’s alcohol excise taxes will have increased 19% because of the automatic annual tax hike first imposed in 2017.
Trudeau could stop next year’s tax hike with a stroke of a pen.
In last year’s budget, the feds watered down the scheduled 6.3% tax hike to 2%. It took the smallest possible stumble in the right direction.
Polling shows the rising cost of living is the single greatest economic issue facing Canadians. Any government serious about affordability would cancel the upcoming tax increase and scrap its automatic tax escalator.
Brownie points: lower alcohol taxes back to what they were before the automatic tax escalator was imposed. After all, since Budget 2017, the government has increased its tax take without MPs voting on the increase. That’s fundamentally undemocratic.
Democracy requires votes on tax hikes. That’s why we have the House of Commons full of MPs who are chosen by their constituents and who take $194,000 in taxpayer-funded salaries. But the automatic tax increases that bypass our MPs are a mockery of our democratic processes.
In fact, the only time MPs were able to vote on the most recent alcohol tax increase, they overwhelmingly voted to cancel the tax hike. Trudeau simply ignored the non-binding motion and the democratic will of Parliament.
Canadians need relief. And the simplest and easiest way for Trudeau to show he even remotely cares about affordability is to end his alcohol tax binge.
– Franco Terrazzano is the federal director and Carson Binda is the B.C. director of the Canadian Taxpayers Federation