Alcohol Taxes In New Brunswick

Alcohol in New Brunswick is subject to the Harmonized Sales Tax (HST), which is a combination of the federal Goods and Services Tax (GST) and a provincial tax. The HST rate is 15%, consisting of a 5% federal component and a 10% provincial component. This tax is applied to all goods and services that are taxable under the federal Excise Tax Act, which includes alcohol. In addition to the HST, there may also be specific excise duties imposed on different types of alcoholic beverages, such as beer, wine, and spirits. These excise duties vary based on the type and volume of alcohol and are adjusted annually.

The taxation of alcohol in New Brunswick is part of a broader strategy to reduce alcohol consumption and address health issues related to alcoholism in Canada. By increasing alcohol prices through taxation, the government aims to discourage excessive drinking and reduce the negative impacts of alcoholism on individuals and society.

New Brunswick's tax on alcohol is based on the total purchase price

In New Brunswick, the increase in legal local purchases of alcohol (up 13%) has been welcomed by the province, which collected an additional $8 million in alcohol levies over a three-month period compared to the previous year. This is likely due to border and travel restrictions reducing cross-border purchases and making the entry of contraband products more difficult.

The taxation of alcohol in Canada is regulated under the Excise Tax Act. The primary consideration behind the high taxes is health and alcoholism in the country. The Canadian government believes that if taxes on alcohol are raised, those who struggle with addiction will be less inclined to purchase it, and the rates of alcoholism, as well as the number of deaths related to alcoholism, will be reduced. There is some evidence to support this, as research in Saskatchewan showed that when alcohol prices were increased by 10%, there was an 8.4% drop in sales.

Alcohol tax rates vary across different provinces in Canada

In Ontario, the tax on alcohol is calculated based on the total tax price of liquor, taking into account the total volume and where the liquor is purchased. The type of alcohol also determines the tax rate. For instance, the tax on wine made in Ontario and purchased at a winery retailer is 6.1%, while non-Ontario wine purchased at a winery retailer is taxed at 20.1%. Beer manufactured in Ontario is taxed at 72.45 cents per litre for draft and 89.74 cents per litre for non-draft, while beer made by microbrewers is taxed at 35.96 cents per litre for draft and 39.75 cents per litre for non-draft. Additionally, non-refillable containers in Ontario are taxed at 8.93 cents.

The variation in alcohol tax rates across Canada can make it challenging to determine the exact amount of tax paid when purchasing liquor outside of one's home province. However, it is important to note that alcohol prices in Canada are already quite high compared to other countries due to the Excise Tax Act, which aims to address health and alcoholism concerns.

Alcohol prices in Canada are regulated under the Excise Tax Act

The Excise Act, 2001, covers bulk alcohol sales, spirits, and wines, while the older Excise Act covers beer, malt liquor, and distillery operations. Generally, different excise duty treatments apply to alcohol for non-beverage use.

Spirits, wine, and beer are all subject to an excise duty that is imposed and becomes payable during the production process. These duties are typically increased annually on April1 and are indexed to inflation. The rates of excise duty vary depending on the type of alcohol and the percentage of absolute ethyl alcohol by volume it contains. For instance, as of April 1, 2024, the rate of excise duty on spirits containing more than 7% absolute ethyl alcohol by volume is $13.569 per litre of absolute ethyl alcohol.

Additionally, certain provinces in Canada, such as New Brunswick, have implemented a Harmonized Sales Tax (HST) which combines the federal Goods and Services Tax (GST) with a provincial tax. The HST rate in New Brunswick is 15%, consisting of a 5% federal component and a 10% provincial component. This means that the HST is applied to all goods and services taxable under the federal Excise Tax Act, including alcohol.

New Brunswick collected an extra $8 million in alcohol tax revenue in 2020

Alcohol prices in Canada are regulated under the Excise Tax Act. Each province charges a different percentage on their alcohol, and each province calculates this percentage differently. In New Brunswick, alcohol is taxed based on the total purchase price of liquor.

In 2020, New Brunswick collected an extra $8 million in alcohol tax revenue. This was due to a number of factors, including the COVID-19 pandemic, which saw an increase in local tobacco sales and tax revenues as a result of border controls and travel restrictions. With fewer supply options, drinkers in New Brunswick were buying locally and legally. This led to a 13% increase in legal local alcohol purchases.

Another factor contributing to the increase in alcohol tax revenue was the rise in alcohol prices in New Brunswick. On April 1, 2024, the New Brunswick government increased the cost of beer, wine, liquor, and coolers. A case of 24 cans of domestic beer, previously selling for $43.99, jumped to $45.99, a 4.5% increase. This included a $1.68 increase in provincial charges, a six-cent increase in federal excise taxes, and a 26-cent HST increase. The average price adjustment was 75 cents, with the final price depending on the product. These price increases were expected to generate an extra $12.3 million in revenue for the province in the coming year.

New Brunswick has some of the highest liquor taxes in the world, with prices almost twice as high as in the United States. The government believes that higher taxes on alcohol will reduce the number of people struggling with addiction and lower the rates of alcoholism and related deaths. While there is some evidence to support this, it is important to note that raising alcohol prices alone may not be enough to curb alcoholism.

Alcohol tax rates are adjusted annually on April 1

Alcohol tax rates in Canada are adjusted annually on April 1. The rates are determined in accordance with the Excise Act and are based on changes to the Consumer Price Index. The taxes are imposed on beer, spirits, wine, and other alcoholic beverages.

The taxes are calculated differently in each province. For example, in Quebec, the tax rate is based on the rate per milliliter of the beverage purchased, while in New Brunswick, it is based on the total purchase price of the liquor. In Ontario, the tax rate also considers the total volume and where the liquor is purchased.

The annual adjustment of alcohol tax rates on April 1 aims to combat consumption and the harms associated with alcohol, including health issues such as alcoholism and cancer. Higher alcohol prices are associated with lower alcohol consumption, and the Canadian government believes that increasing taxes can help reduce the rates of alcoholism and related deaths. Additionally, it is argued that individuals who drink excessively cost the healthcare system more. As a result, the government aims to offset these increased costs through higher alcohol taxes.

The adjustment also takes into account the inflation rate, with the federal government proposing to cap the inflation adjustment for excise duty rates on beer, wine, and spirits at 2% for two additional years starting from April 1, 2024.

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