Ontario Government Again Freezes Built-In Tax Hike on Beer and Wine

Ontario Government Again Freezes Built-In Tax Hike on Beer and Wine
High-end wine and sparkling wine on display at a liquor store in Vancouver. (The Canadian Press/Jonathan Hayward)
Jennifer Cowan

The Ontario government is again vowing to freeze the provincial tax built into the price of beer and wine as Ottawa gets ready to increase its federal tax on alcohol this spring.

The province has announced the beer basic tax and Liquor Control Board of Ontario (LCBO) mark-up rates that were set to rise roughly 4.6 percent on March 1 will remain frozen for the next two years.

“This increase would have resulted from rates being indexed to inflation, which the government has consistently stopped over the last six years, resulting in approximately $200 million in relief,” the province said in a Feb. 9 news release, adding that prices will be frozen through March 1, 2026.

The beer basic tax and LCBO mark-up rates are built into the price of products customers see on store shelves rather than showing up as an added tax on store receipts.

The tax freeze comes just two months after the province announced it will allow beer, wine, cider, coolers, seltzers, and low-alcohol drinks to be sold in convenience, grocery, and big-box stores beginning Jan. 1, 2026.

“Our government is building on its commitment to offer choice and convenience to consumers while providing certainty and stability for the alcohol and hospitality sectors,” Finance Minister Peter Bethlenfalvy said in the press release.

He said the pause on the beer basic tax and LCBO mark-up rates will help “brewers to reinvest in themselves and their workers” in preparation for the “transition to a new alcohol retail marketplace.”

The province said it is gearing up for the transition to Ontario’s new marketplace by meeting with industry and other stakeholders. The provincial government will also conduct a targeted review of taxes and fees on beer, wine and alcoholic beverages in a bid to promote a “more competitive marketplace” for Ontario-based producers and consumers.

Federal Alcohol Tax Increases April 1

The federal government, meanwhile, is set to increase its tax on alcohol by 4.7 percent beginning April 1, despite calls to cancel it.
A Canadian Taxpayers Federation (CTF) report released in December calculated that the tax increase will cost Canadians approximately $100 million.

Taxes already account for approximately 50 percent of the price of beer, 65 percent of the price of wine, and more than 75 percent of the price of hard liquor.

The tax, which is known as an “escalator tax,” is automatically increased at set intervals with no debate or vote in Parliament prior to the scheduled increases. Before the tax was automated, it had to be approved in the House of Commons before it could be increased.

Tory MP Tracy Gray called on the Liberals in a Feb. 9 social media post to halt the tax hike, saying that the tax will take an extra $100 million out of the Canadians’ pockets in 2024–25.

“Stop the Liberals’ April Fool’s Day tax hike,” she said.

Beer Canada has also criticized the upcoming tax increase.

“Fundamental sound tax policy includes taking into account current economic conditions,” the group said in a Feb. 9 post on X. “Raising beer taxes by nearly 5 percent will make life more, not less expensive for hard-working Canadians.”