This morning, the Ontario government announced a freeze on the automatic annual increase of the beer basic tax. The estimated 4.6 per cent increase to the beer basic tax was scheduled for March 1, 2024, and would have resulted from the rate being indexed to inflation. The provincial government has deferred the automatic increase for the past six years. The latest freeze will be in place for two years, until March 1, 2026.
TIAO welcomes today’s announcement, which is a step in the right direction to provide tourism and hospitality businesses with greater cost certainty amidst rising commercial costs. Taxes like the beer basic tax are embedded in the total price and are considered in menu pricing calculations. Restaurants, food and beverage operators, attractions, and agritourism businesses are encountering challenges managing unprecedented inflationary costs. Menu price increases are impacting consumers who are already cutting back on discretionary spending due to inflation and the rising cost of living. Tax hikes only add additional pressures to both businesses and consumers.
TIAO has been advocating alongside the Ontario Restaurant Hotel and Motel Association (ORHMA) to repeal the scheduled beer basic tax increase and to eliminate further indexation increases. This was a key recommendation featured in our pre-budget hearing presentation before the Standing Committee on Finance and Economic Affairs, in our pre-budget submission, and in our 2022 State of the Ontario Tourism Industry Report. Today’s announcement is in direct response to our joint advocacy.
We note, however, that the two-year freeze is just one measure to support Ontario’s beverage alcohol sectors. TIAO will continue to work with partners like Ontario Craft Brewers on further measures to modernize the beer tax framework to support the economic growth of Ontario’s craft breweries, which drive 5 million visits annually to mostly rural destinations across the province.