13 February 2023
Jenica Atwin, MP, Fredericton
House of Commons
Ottawa, Ontario
K1A 0A6
Dear MP Atwin,
Re: Federal Escalator Tax on Alcohol
Thank you for our meeting last week – I am writing as a follow-up to express our continued concerns about the federal government’s alcohol escalator tax. I have previously written to you about this issue in September 2020 and prior to that to former MP Matt DeCourcey in November 2018.
Placing an escalator tax put on alcohol puts an even bigger burden on local restaurants and bars that are already struggling with the current inflationary environment, workforce issues, continued COVID-19 fallout and more – and are doing their best to keep their doors open. The escalator tax forces them to raise the prices of their alcoholic beverages annually, which hurts their ability to attract customers, retain employees and recover from the pandemic.
With Canadians already paying some of the highest taxes in the world on alcohol, the escalator tax seems difficult to justify given the current state of Canadian business’ competitiveness, particularly vis-a-vis the United States.
The escalator tax is a drag on the economic generally and distillers directly, but also throughout the supply chain barley, corn, rye and wheat used by Canada’s nearly 200 distillers, and for those working in liquor stores, bars and restaurants across the country. Canada’s distillers today support 8,500 jobs across the country and generate $5.8 billion annually in local economic activity. The new automatic escalator tax will mean fewer jobs, less investment and higher taxes.
Canada’s distillers need fair and stable taxes to be able to compete with other countries. This will mean international brands replacing Canadian ones on store shelves while more Canadian jobs are lost to more competitive jurisdictions.
I would also like to draw your attention to the fact that increasing alcohol taxes every year drives down investment, growth and jobs for Canada’s domestic alcohol producers, hurting their ability to compete around the world. We are asking for your support in ensuring the escalator tax be rescinded or at a minimum, frozen, in the next federal budget, giving all Canadians a much-needed break. Restaurants and bars need our help as we continue the pandemic recovery process, and the escalator is exacerbating their issues and hindering much-needed economic growth.
Sincerely,
Krista Ross, CEO, Fredericton Chamber of Commerce
cc: Hon. Chrystia Freeland, Minister of Finance, Government of Canada
cc: Jan H. Westcott, President & CEO, Spirits Canada
cc: Richard Alexander, Restaurants Canada, Atlantic Division
cc: Lori Stickles, President & CEO, NB Liquor