The restaurant industry is waiting to see if the federal government puts the brakes on a 6.3 per cent increase on the alcohol excise duty scheduled to take effect April 1.
Last week Restaurants Canada welcomed the release of a report by House of Commons Standing Committee on Finance that included a recommendation to freeze federal beer, wine and spirit excise duties at 2022 rates for fiscal years 2023 and 2024, and until inflation returns to the Bank of Canada’s one per cent to three per cent target range.
“The majority of parliamentarians are in support of freezing it. But once again the budget’s in the hands of the Liberal government and we’ll see if we have something to celebrate next week, or if they’re just going to go ahead with this,” said Mark von Schellwitz, vice-president Western Canada with Restaurants Canada.
The alcohol excise duty on manufacturers is adjusted by law annually, and the federal budget will be released March 28.
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Brandon Bouchard, board chair with Red Deer Downtown Business Association and manager of Tribe restaurant, said bars and restaurants buy in bulk which cuts costs, but a tax increase would need to be passed onto customers.
“We don’t know what that’s going to look like. When you combine that with the rising cost of food and other supplies to run our business, it’s one more hit. At the end of the day, the last thing we want to do is raise our prices, but we have to be profitable at the same time,” Bouchard said.
It may result in less foot traffic, but there has been a growing demand for mocktails and non-alcoholic beverages, he said.
“Folks are going out not necessarily just focused on finding an alcoholic beverage. They’re going out for an experience. They want food. They want a nice room, and they want time with their friends or family. Our job is to give them what they want at the best possible price while trying to remain profitable,” Bouchard said.
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Von Schellwitz said a 6.3 per cent tax increase would cost Canada’s food-service industry an estimated $750 million a year, with the average casual dining restaurant expected to pay an extra $30,000 towards alcohol.
He said that is only one of the cost pressures facing the industry with inflation at a 40-year high. Food is up 15 per cent and certain menu items are even more expensive. Labour costs are up 12 per cent at the same time the labour shortage reduces operating capacity. Insurance, municipal taxes, rent and utilities have increased, and the carbon tax will also go up on April 1 which will impact just about everything.
“It’s a really tough time in the industry just to fully recover from the pandemic. We have 85 per cent of our members that took on additional debt just to keep the lights on, keep their people employed during the pandemic. They’re finding it really difficult.”
— with files from The Canadian Press
szielinski@reddeeradvocate.com
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