Alcohol tax reduction for distilleries in the province of Ontario.
Alcohol tax reduction in Ontario: Small breweries express satisfaction.
Small breweries and distilleries in the province of Ontario have expressed relief over the alcohol tax reduction and the recent increase implemented by the Liquor Control Board of Ontario (LCBO), even though consumers may not notice any change on their receipts.
In 2024, the Government of Ontario reassessed alcohol taxes and markups to promote a more competitive and modernized market. Beer and wine taxes are applied to producers, while the additional markups imposed by the Liquor Control Board are used to cover operating costs.
Steve Himel, co-founder of Henderson Brewing, believes that the tax reduction is welcomed by small businesses with narrow profit margins. He adds, “This makes a big difference.”
“Craft beer production comes with high costs, and the past few years have been challenging. So this reduction comes at the right time. It helps us regain our competitiveness,” Himel said.
While Himel and other producers note that the changes will help them invest in the growth of their businesses, they add that the reductions will not necessarily lead to lower prices for consumers.
“We have the option to be more competitive or reinvest in our business,” he says.
The reductions will help offset tariff costs.
Graham Reed, owner of a distillery, says that the tax reduction will help offset the impact of tariffs on aluminum cans, noting that his distillery uses these cans for its ready-to-drink beverages.
For example, before the tax reduction, his distillery was making a profit of only $4 per bottle of Gin. Consumers purchase the bottle for $50, of which about $38 goes toward taxes, he said.
The distillery plans to sell its products at the same prices, allowing it to increase its profit margin.
Graham Reed says, “Before the reductions, importing the product was easier than manufacturing it here in Ontario,” adding that it shouldn’t be that way.
Reed finds managing a distillery extremely challenging, saying, “This explains why there are so few distilleries in Toronto and Ontario in general.” He affirms that the tax reductions represent a fundamental change for the craft beer industry.
