Ottawa extending 2% alcohol tax hike cap for another 2 years

OTTAWA – The federal government is set to extend its cap on an annual alcohol tax increase for another two years in a bid to rein in costs for Canada’s brewers, wineries and distilleries.

Changes to legislation in 2017 mean excise taxes paid by boozemakers are automatically set to rise annually in line with inflation on April 1 each year, without the need for parliamentary approval.

The Liberal government has temporarily capped those hikes at two per cent since 2023.

Wednesday’s scheduled increase was supposed to mark the final year for that cap.

But a government official who was not authorized to speak about the announcement before it’s made public told The Canadian Press Ottawa is set to renew the cap through to 2028.

The federal government is also giving a two-year extension to an agreement meant to support craft brewers that cut excise taxes in half for the first 15,000 hectolitres of beer brewed in Canada.

The official said the extensions look to give predictability to Canadian brewers, wineries and distilleries in the midst of global trade and supply chain disruptions, and ahead of what could be a busy drinking season with the FIFA World Cup coming to Canada this summer.

Christine Comeau, executive director of the Canadian Craft Brewers Association, said in a statement to The Canadian Press on Tuesday that her organization had been advocating for a permanent expansion of the excise tax relief to the first 500,000 hectolitres of brewed beer.

But she still hailed the announcement as good news and said extending the cap and reducing taxes on a portion of beer gives small breweries “much-needed breathing room” at a time when they’re facing heavy operating pressures.

“This kind of relief will make a meaningful difference for breweries across the country, while keeping more of that economic activity here in Canada,” Comeau said.

The federal Conservative party and the Canadian Taxpayers Federation have both been calling on the Liberals to scrap the planned tax hike on alcohol completely ahead of the April 1 deadline.

Franco Terrazzano, federal director at the taxpayers federation, said in a media statement that extending the cap doesn’t go far enough and argued that automatic tax hikes are “undemocratic.”

“(Prime Minister Mark) Carney shouldn’t be hiking taxes at all. He should be cutting taxes to make life more affordable and help Canadian brewers, distillers, pubs and restaurants survive,” Terrazzano said.

Beer Canada, an association representing more than 30 brewers who collectively produce 90 per cent of beer consumed domestically, estimates that federal taxes on beer have risen 18 per cent under the escalator increases since 2017.

Richard Alexander, president of Beer Canada, said in a statement to The Canadian Press that this year’s scheduled increase will add an estimated $14 million to the tax burden on brewers and other players in the alcohol industry.

“While we await formal details from the Government of Canada, our position remains unchanged: this automatic tax policy should be repealed, and decisions on taxation should be returned to Parliament where they can be properly debated and scrutinized,” he said.

This report by The Canadian Press was first published March 31, 2026.