'We don’t want to increase our prices': Restaurants call for cap on booze tax

Restaurants across Canada have joined others in the hospitality industry in calling for a cap to the annual alcohol excise tax — a tax tied to the rate of inflation.

Restaurateur Cleopatra Camara, who owns two Sweet Onions Bistro locations in London, said it’s a choice between losing money or customers.

“My concern is that they will then decrease the frequency of when they go out, how much they spend, whether they order alcohol with their meal or not,” she said.

The alcohol excise tax is set to increase an estimated 4.7 per cent on April 1.

That would be the largest increase in 40 years. According to Camara, that’s a lot for a small business to absorb all at once.

“That can cost us thousands of dollars in the end, over the course of a year. Even those slight percentages are significant enough,” she said.

According to Restaurants Canada, 62 per cent of restaurants in Canada are operating at a loss or just breaking even. That compares with just ten per cent before the pandemic.

With inflation at 6.3 per cent one year ago, the federal government capped the alcohol excise tax at two per cent. Restaurants Canada is calling for the same cap to be implemented this year.

“When inflation is low at between one and three per cent, it’s not too bad. But when it gets really high like last year and this year, it’s really costly for everyone to pay it,” said Restaurants Canada vice president Max Roy.

“Right now, there’s a lot of tough decisions that are being made. This is not only related to the excise tax on alcohol but it adds up to it.”

The alcohol “escalator” tax automatically increases federal excise taxes on beer, wine and spirits every year on April 1.

According to the Canadian Taxpayers Federation (CTF), taxes already account for about half the price of beer, 65 per cent of the price of wine and more than three quarters the price of spirits.

The CTF adds the increase will cost taxpayers about $100 million this year and next year.

“We don’t want to increase our prices to the degree that it will prevent people — again — from coming in,” said Camara.