Canadian craft beer industry pushes tax breaks
The craft beer and wine industries in Canada are pushing for alcohol tax reductions ahead of the upcoming budget. The lobby push comes despite the rising alcohol harm rise in Canada and increasing gaps in mental health and addiction services for children and young people.
The craft beer industry and their lobby front groups, including the Canadian Craft Brewers Association and the Beer Institute, are drawing parellels to the alcohol taxes in the United States (U.S.) and are pushing for tax cuts in Canada similar to the massive tax cut the Trump administration gifted Big Alcohol in the U.S.
But the Trump tax cut for Big Alcohol has further fuelled accelerating alcohol harms in the U.S. But the Canadian alcohol lobby conveniently ignores this fact.
In 2019, the U.S. Congress extended the major tax break for the alcohol industry, losing billions of dollars in government revenue. Congress extended the tax break for beer, wine and distilled spirits which was initially approved in 2017. This is the alcohol tax change in the U.S. that the Canadian alcohol lobby groups are using to say taxes are too high in Canada.
Without the Trump tax cut gifted to alcohol companies,
- The Distilled Spirits Council (DISCUS) would have payed $275 million in higher taxes.
- A beer industry group claims they would have to pay $130 million in higher taxes.
- California wineries alone would have paid $150 million in higher taxes.
The Trump administration pushed the alcohol tax cuts through despite alcohol becoming more affordable over the last decades. In a 2017 study Xuan and colleagues found that from 1991 to 2015, the average inflation-adjusted (in 2015 dollars) state alcohol excise tax rate declined 30% for beer, 32% for distilled spirits, and 27% for wine.
Evidently, the tax break in U.S. was an ill-advised decision.
The U.S. government lost precious government revenue that could have been invested in health and development of people and communities across the country who are severely affected by rampant alcohol harm.
According to latest findings from a brand new study, alcohol-related deaths in the U.S. increased by about 25% from 2019 to 2020. This is a sharp rise from the 2.2% average annual percent increase in alcohol-related deaths between 1999 and 2017.
Another recent study showed the impact of alcohol harm: among U.S. adults working full time an estimated 9.3% or about 11 million suffer from alcohol use disorder. The study found that overall full-time workers with AUD missed more than 232 million workdays annually. People with alcohol use problems accounted for 14.1% of all missed workdays in the United States.
The Canadian government can avoid repeating the mistake of the Trump administration in the U.S. to make alcohol more affordable and thus fuel rising alcohol harm.
Already, scientific research warns the same trend seen in the U.S. with alcohol playing a major role in declining life expectancy might be catching up to Canada as well. Increasing alcohol affordability by cutting taxes in the interest of alcohol industry profits will further accelerate this harmful trend.
Nevertheless, the Canadian government appears to take the same ill-advised decision as the United States. A finance committee report on the upcoming budget recommends the government adopt a system similar to the one in the U.S. to help small Canadian distillers and other craft alcohol producers compete in Canada and abroad.
Canadian wine industry wants the government to use the Federal budget to offset cost of excise duties for a decade
Canada was in a trade dispute with Australia at the World Trade Organization since fully Canadian wine products were exempt from excise duties. Australia complained that this is unfair for imported wine products.
Canada had exempted Canadian wine from excise duties for 16 years. To resolve the trade dispute Canada agreed to reinstate excise taxes on Canadian wine starting from the beginning of 2022.
In last year’s budget Canada set aside $101 million to offset the cost of excise duties from Canadian wine products for two years. But the Canadian wine industry demands the government to offset the cost of the Canadian wine excise duties from the federal budget for an entire decade.
Alcohol policy intereference in Canada by Big Alcohol
Big Alcohol has a track record of systematically targeting and attacking public health policy efforts in Canada. For example, when the Yukon provincial Government placed health warning labels on alcohol bottles for a research study in 2020, the alcohol lobby threatened legal action. Due to the heavy pressure of the alcohol industry the Yukon government shut down the study.
In the beginning of April this year, opposition MPs introduced private members’ bills calling for other changes to excise duties. Conservative MP Pat Kelly introduced a bill to repeal automatic yearly increases and drop duty rates. Meanwhile, a bill put forward by NDP MP Richard Cannings proposes to eliminate duties on non-alcoholic craft beer.
This raises the question as to whether these MPs are under the influence of the alcohol lobby.
Both bills have passed first reading in the House.
The Finance Minister Chrystia Freeland’s office has not responded to questions about the finance committee’s recommendation to change excise taxes.
Alcohol harm is already high in Canada
It is estimated that annually alcohol causes massive harm to people and communities in Canada.
- 18,000 deaths,
- Costs amounting to an estimated $16.6 billion annually in
- health care,
- lost productivity,
- criminal justice, and
- other direct costs.
Furthermore, in Canada the products and practices of the alcohol industry cause:
- 90,000 hospital admissions,
- 240,000 years of life lost, and
- 38% of all healthcare costs in 2014 were attributable to alcohol use disorder.
- An economic toll of $16.6 billion in 2015-2017, which is greater than that from either tobacco use or from cannabis, opioids and all illegal substances combined.
Big Alcohol’s relentless lobbying fuels alcohol harm
Both the craft beer industry and the wine industry in Canada have cited the COVID-19 pandemic as reason to push for weakening alcohol policies further in Canada. The pandemic has already worsened the levels of harm caused by alcohol industry products and practices. Alcohol sales increased during the pandemic in Canada, driven by the heavy pandemic centered alcohol marketing and the aggressive lobbying push for weakening existing alcohol policy rules on provincial and local levels.
Rising alcohol use during the pandemic could have long-term consequences for people and communities in Canada. Already, the increase in alcohol use in Canada is leading to rising mental health problems. According to a Nanos Research survey of 1003 Canadians, among those who increased alcohol use, 16% reported their mental health worsened and 24% reported mental health is somewhat worsened.
Children and young people are specifically affected by alcohol harm. For example, there is high demand for mental health and addiction support for children and youth in Saskatchewan Province. This demand is not being met.
Dr. Lisa Broda, the Saskatchewan Advocate for Children and Youth released a report called ‘Desperately Waiting’. The report states that children and youth are at a crisis point trying to access and receive mental health and addiction services.
We must not be satisfied with the state of mental health and addictions service provision as it is today,” said Dr. Lisa Broda, the Saskatchewan Province Advocate for Children and Youth, as per Nelson Star.
After decades of the same issues, we cannot expect outcomes to change without significant investments and for the system to immediately prioritize the well-being of children.”Dr. Lisa Broda, Saskatchewan Province Advocate for Children and Youth
A better use of the Canadian Federal Budget, instead of using funds to offset the wine industry excise duty costs, would be to invest in much needed mental health and addiction services for young people.
The report by the Saskatchewan Advocate for Children and Youth outlines recommendations to improve mental health and addictions inpatient and community-based services.
Canada needs a federal alcohol policy
Despite the massive alcohol harm the country does not have a federal alcohol policy. Instead, alcohol policies are governed by provinces and territories. The absence of an adequate alcohol policy system has caused several provinces and territories to weaken alcohol laws under the pressure of the alcohol industry. But weakening alcohol policy means that more and more people and communities are exposed to harms caused by the products and practices of the alcohol industry.
For example, in Ontario the lowering of alcohol policy standards resulted in a spike in driving under the influence (DUI) of alcohol in the province, thus endangering the lives of many people. The weakening of policies also led to young people using alcohol in more high-risk patterns.
The World Health Organization recommends increasing alcohol excise taxes as one of the best buy alcohol policy solutions governments can use to prevent and reduce harm caused by alcohol products. As Movendi International has reported before, Canada needs a federal alcohol policy encompassing the WHO recommendations such as the SAFER blue print, to protect people and communities from alcohol harm.
Nelson Star: “Craft beer and wine sectors calling for changes to excise duties in budget“
Gx94 Radio: “Children and youth ‘Desperately Waiting’ more supports for mental health and addiction“