Ontario craft brewers say they’re struggling to keep up due to high taxes

October 19, 2024 Canuck

Ontario craft brewers say the province needs to speed up its review of alcohol taxes, fearing small breweries will be forced to shut down because of them and be unable to grow amid an expanded retail market.

Breweries have been holding out hope that some financial relief would be around the corner, but many who make craft beer say they’re struggling to stay afloat, noting Ontario pays sky-high taxes to operate craft breweries.

“In comparison, a brewery the same size as Steam Whistle in Quebec pays a little more than $4 million less in tax every year,” said Greg Taylor, co-founder of Steam Whistle Brewing.

“It would be great for us to be able to have lower tax costs so that we can invest and produce more jobs in Ontario and provide better services to the new retailers that are just opening up.”

The province began its review last year after the organization, Ontario Craft Brewers, launched a campaign highlighting that the province has the highest craft beer taxes in Canada. Local breweries say the longer they operate without any kind of tax reform, the more of these breweries will be at risk of shutting their doors. Now, a new campaign called Save Local Craft Beer aims to keep the issue top of mind, especially as alcohol sales expand.

Taxation ‘prevents solid, strong growth’: brewery

As time passes and costs continue to rise, local businesses say they worry about their ability to keep their doors open.

“We currently pay three different layers of taxes,” said Troy Burtch, senior manager of sales and business development at Great Lakes Brewery.

“The taxation just prevents solid, strong growth.”

Last month, the province announced the largest expansion of provincial alcohol sales since the end of Prohibition almost 100 years ago — with licensed convenience stores now able to sell beer and other alcoholic beverages.

Craft breweries say they celebrate that step, but add they also need the chance to keep up.

“Let’s get the rates down, and let’s allow these brewers a chance to breathe and to invest and to take advantage of the new retail marketplace,” said Scott Simmons, president of the Ontario Craft Brewers Association.

Review underway, says province

In a statement, the Ministry of Finance said it has been there for local brewers and is keeping costs down by freezing the beer tax every single year it could.

“To support brewers and wineries to recover and grow, and to save consumers money, Ontario paused the scheduled increase in beer tax rates and cancelled the scheduled increase in wine tax rates put in place by the previous Liberal government,” the statement said.

The province confirmed it will be conducting a review of alcohol taxes, mark-ups and fees on beer, wine and alcoholic beverages with the aim of ensuring competitiveness and value for consumers, but did not say when that review will be complete.

Ontario Craft Brewers says the industry is at a critical point where it has the potential to grow rapidly, but only with the support of the province.

“The craft beer industry in Ontario is ready to explode,” said Simmons.

“We’re vastly underdeveloped versus provinces like B.C. and Alberta. And the reason is simple. They’ve got an expanded retail system like we’ve just announced, and they also have far lower taxes.”

Burtch says these spaces do a lot more than just sell craft beer — they often act as meeting places, host local events and bring people together.

“We give back so much to communities, and the community gives back so much to us. So I think the more we can grow, the more communities will evolve too.”

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