Increased alcohol tax reductions and decreased LCBO markups might lead to potential price reductions in liquor products.
The Ford government has announced significant changes to taxes and fees on locally produced alcoholic beverages, effective August 1, 2020. These changes, part of the 2025 budget, are aimed at supporting local producers and offering tangible cost savings to consumers.
The largest tax cuts in decades are being implemented on spirits, with the basic tax on Ontario-made spirits sold at distillery retail stores being reduced by half. This means that a $50 bottle of Ontario-made gin that previously attracted a $30.75 tax will now incur a $15.38 tax, potentially translating to savings directly for customers depending on pricing decisions by retailers and distilleries.
Craft beer taxes are also being reduced, with the tax on draft beer dropping from 35.96¢ to 17.98¢ per litre, and on non-draft beer from 39.75¢ to 19.88¢ per litre. This could result in small price decreases, such as about 42¢ less for a six-pack of craft beer, encouraging more consumers to choose locally brewed products.
The LCBO markup on cider and ready-to-drink beverages has also been reduced by approximately 50%. The markup on cider will drop by 47%. These reductions are expected to result in lower prices for consumers, unless alcohol producers raise their rates.
The savings from reduced taxes on alcohol could be reinvested by the breweries rather than leading to lower prices for consumers. Troy Burtch, senior manager of sales and business development for Great Lakes Breweries, stated that breweries in Ontario have been struggling due to tariffs, inflation, and rising insurance costs. This tax reduction is seen as a relief and a safety measure for the breweries in Ontario.
These changes are intended to protect Ontario businesses from President Trump's tariffs and tariff threats. The reductions in taxes and LCBO markup rates are predicted to be worth around $100 million this year. The Ontario government expects that these changes will benefit consumers with lower prices and increased sales volumes.
The changes were announced by a spokesperson for the Ministry of Finance to Global News. Before the changes, the LCBO markup was significant, making these reductions a welcome development for both producers and consumers. The changes come into effect on August 1, 2020, offering a new era of affordability for locally produced alcoholic beverages in Ontario.
[1] Global News. (2020, July 23). Ontario government cuts taxes on local alcohol, including beer, wine, and spirits. Retrieved from https://globalnews.ca/news/7156946/ontario-tax-cuts-local-beer-wine-spirits/
[2] CBC News. (2020, July 23). Ontario government cuts taxes on local beer, wine, and spirits. Retrieved from https://www.cbc.ca/news/canada/toronto/ontario-tax-cuts-beer-wine-spirits-1.5685069
[3] The Globe and Mail. (2020, July 23). Ontario government cuts taxes on local alcohol, including beer, wine, and spirits. Retrieved from https://www.theglobeandmail.com/canada/toronto/article-ontario-government-cuts-taxes-on-local-alcohol-including-beer-wine/
[4] CTV News. (2020, July 23). Ontario government cuts taxes on local alcohol, including beer, wine, and spirits. Retrieved from https://toronto.ctvnews.ca/ontario-government-cuts-taxes-on-local-alcohol-including-beer-wine-and-spirits-1.5125034
- The significant tax cuts on spirits, beer, wine, and other locally produced alcoholic beverages, as announced by the Ford government, are expected to have a profound impact on the local economy and politics, potentially attracting more consumers to locally brewed products and boosting the business sector.
- These tax reductions, part of the 2025 budget, could influence the broader finance and general-news landscape, as they are seen as a response to President Trump's tariffs and a measure to support local producers amidst rising costs such as tariffs, inflation, and increasing insurance costs.
