Last summer, Prime Minister Trudeau took to X (formerly Twitter), imploring mega-star Taylor Swift to add Canadian dates to her jaw-droppingly successful Eras Tour. He was speaking for Canadian Swifties and no doubt keen to attract the positive economic knock-ons that accompany Ms. Swift’s music machine wherever she goes.
Maybe it worked because Swift added Canadian dates to the roster. So, with apologies to her, we’re going to try something similar.
Dear Prime Minister:
It’s us. Hi. We’re bar and restaurant owners and we need a reprieve from alcohol excise taxes.
It’s been one hit after another for the people who run bars and restaurants. We’ve endured lockdowns, supply chain snafus and ever-rising costs for absolutely everything we need to run our businesses. The costs never seem to stop rising for payroll, rent, food and beverages, and even cooking oil!
Many of Canada’s hard-working small business owners who run bars and restaurants didn’t survive the pandemic lockdowns and are not even operational anymore. For those of us still here, we thought we were through the worst of it when the lockdowns were lifted. Then came inflation tearing through our balance sheets and pushing the profitability of bars and restaurants down, down, down.
We’re the businesses where people go to meet friends for a bite to eat, a quick meal on their way to the rest of their busy days, and gather for a celebration. We love serving our customers, but we’re on the front line, and there’s no one between us and the customer.
We have a choice between two bad options: pass on rising costs to our customers or absorb them. We know our customers are also experiencing tough economic times, with prices rising all the time and needing to manage their household budgets. We worry if we pass on costs to the customer, our business will suffer because people will come in less frequently, order less or just skip their ritual visit to their favourite bar or restaurant. We also worry if we continue absorbing the rising costs, we’re tanking our business’s ability to continue, putting at risk the jobs of our staff and ourselves. Something has to give, but the knocks keep coming.
Once again, the federal government is set to apply a huge increase of 4.7 percent to the alcohol excise tax on Apr. 1. This increase kicks in without discussion or debate because the excise tax automatically applies an escalator to beer taxes based on the previous 12-month Consumer Price Index (CPI) – so-called icing on the cake of upward pressure on pricing due to inflation.
Or, from where we bar owners sit, it feels like an additional blow when we are already struggling with unfriendly market conditions. We are part of the hospitality and entertainment sector, which is still recovering from the effects of the pandemic.
What makes it even more challenging is that this tax is applied at the production level: while others can simply pass on the increased costs to their customers – we can’t. There’s a saying about stuff flowing downhill, and we know why.
In last year’s federal budget, Finance Minister Chrystia Freeland capped the expected huge increase in excise tax at two percent for one year. We’re grateful for the temporary relief this provided to our businesses and the customers we serve. But Apr. 1 is looming again, and we’re staring down another body blow levied by your government.
Prime Minister: this is where you come in. We’re asking for a freeze on the excise tax on alcohol as a reprieve from these big jumps in tax rates based on inflation. This is a reasonable approach and provides a reprieve for bar and restaurant owners (as well as the rest of the brewing and distilling industry and our customers). It also provides a measure of predictability as we plan for this year and the future.
You made the call for Swifties. Now make the call for hard-working Canadians who run bars and restaurants. Put in a word for us with Minister Freeland so she knows how much our industry needs the reprieve from excise taxes on beer. Let’s avoid the lost sales, lower revenues and layoffs we can expect from a big jump in excise taxes.
Please don’t make it a cruel summer.
Jeff Guignard is the Executive Director of the Alliance of Beverage Licensees (ABLE BC). The Alliance of Beverage Licensees (ABLE BC) is the voice of British Columbia’s bars, pubs, and private liquor stores.
©
