Hon. Jim Quinn: Honourable senators, my question is for the Government Representative in the Senate. Senator Gold, there is a growing concern across the wine, liquor and beer industry that next year’s automatic excise duty rate increase, which is tied to inflation, could reach or likely exceed 6%. With respect to beer alone, this would be the equivalent of some $41 million in new taxes. The potential 6% increase is due to the implementation of the automatic escalator clause that was introduced in the 2017 Budget Implementation Act, despite concerns of the Senate at the time.

Former Senator Day said it:

. . . takes away power and responsibility of parliamentarians to oversee government expenditure, to act in the interest of the people of Canada to protect the public purse.

In my view, this starts to distort the constitutional principle of no taxation without representation. By creating an administrative efficiency to avoid going before Parliament yearly to increase taxes, we are now faced with a situation of inflexibility with rising rates. This, I believe, distracts or takes away from what was intended in 2017, when inflation rates were low, and we were experiencing significantly lower interest rates.

Senator Gold, will the government repeal the escalator clause related to the excise tax on alcohol products?

Hon. Marc Gold (Government Representative in the Senate): Thank you for your question. To the best of my knowledge, the government does not have any plans to repeal that. As with other taxes and benefits, the alcohol excise duty rate is automatically adjusted each year to account for inflation, as you point out in your question.

Colleagues, this is the right approach. It provides certainty to the sector while ensuring our tax system is fair for all Canadians. I have been advised that the increase is less than one fifth of one penny for a can of beer and, indeed, there are specific measures that take into consideration the needs of craft brewers. Currently, low-alcohol beer — beer with less than 0.5% alcohol by volume — is subject to excise duty, while low-alcohol wine and spirits are not.

I’m further advised the government will eliminate excise duty on low-alcohol beer effective as of July 1, 2022. This will bring the tax treatment of low-alcohol beer into line with the treatment of wine and spirits with the same alcohol content, and make Canada’s practices consistent with those in other G7 countries.

The government recognizes the important contributions that Canadian wine, beer and spirit producers make to the Canadian economy.