OTTAWA – As Canadians continue to face elevated costs of living, the federal government’s scheduled increase to alcohol taxes is drawing sharp criticism from industry advocates and labour groups, who are urging Prime Minister Mark Carney to reverse the policy.
A two per cent federal excise tax is set to take effect on April 1, impacting beer, wine, and spirits. The Canadian Taxpayers Federation (CTF) is leading the charge against the increase, arguing it will further strain household budgets and harm businesses.
“Canadians are struggling with the cost of everything, and Carney shouldn’t make taxpayers pay more for a cold one,” said Franco Terrazzano, CTF Federal Director. “Instead of making life even harder for brewers, distillers, pubs, and restaurants, the federal government should cut taxes to make Canadian businesses more competitive.”
According to industry estimates, the upcoming tax hike will cost Canadian taxpayers approximately $41 million in 2026-27. The CTF points out that the tax increase is not subject to parliamentary vote, having been initially implemented in the 2017 federal budget as an “automatic escalator tax.” Since its introduction, the CTF estimates the escalator tax has cost taxpayers around $1.6 billion.
Concerns extend beyond consumer affordability. Unionized brewery workers have also voiced opposition, warning of potential production cuts and job losses. In a letter to the federal government, workers expressed their dismay at the timing of the increase, given existing economic pressures. “At a time when Canadians are struggling with affordability and workers’ futures are uncertain, it is difficult to understand how another tax hike on a proudly Canadian manufacturing industry could be justified,” the letter reads.
The CTF argues that taxes already constitute roughly half the price of alcoholic beverages, encompassing levies from various levels of government. Terrazzano characterized the automatic tax increases as “undemocratic, uncompetitive and unaffordable,” calling for a parliamentary vote on any future tax adjustments. “If politicians suppose Canadians aren’t paying enough tax, they should at least have the spine to vote on the tax increase,” he stated.
The debate over the alcohol tax increase comes as the federal bureaucracy itself faces scrutiny. Recent reports indicate the cost of the federal bureaucracy has risen significantly, reaching $71.4 billion in 2024-25, according to the Canadian Taxpayers Federation. The CTF has also criticized Prime Minister Carney for announcing an expansion of automatic tax filing shortly after the conclusion of a government consultation on the matter, alleging the consultation was a “sham.”
The Canada Revenue Agency (CRA) has also come under fire, with the CTF noting its substantial growth in staffing – a 33 per cent increase since 2016, bringing the total to 52,499 bureaucrats. The CTF contrasts this with the U.S. Internal Revenue Service, which has 90,516 bureaucrats but serves a significantly larger population. The CRA currently has one bureaucrat for every 800 Canadians, compared to one for every 3,800 Americans.
The Canadian Taxpayers Federation has also raised concerns that the CRA acting as both tax collector and filer creates a conflict of interest.
