If you’ve ever been to the LCBO or purchased alcohol in Canada, you might have been surprised by the final price at the till. To date, Canada has some of the highest Liquor Taxes in the world. Our liquor prices are almost twice as high as those in the United States. But why does alcohol cost so much in Canada? Let’s look at what liquor taxes, also known as Alchohol Tax, are across the different provinces and discover why they are so high.
Liquor Tax in Canada by Province
It probably comes as no surprise that liquor taxes vary from province to province. Each province charges a different percentage on their alcohol, and each province calculates this percentage differently. Here’s a breakdown of how much tax you will be charged on alcohol depending on where you are in Canada:
If you live in Quebec, your alcohol taxes will be based on the rate per milliliter of the beverage purchased. The tax rate will vary depending on whether you are buying beer or some other type of alcohol. If you are purchasing beer, taxes are 36 cents per liter. If you are purchasing any other kind of alcohol, taxes are 72 cents per liter.
If you are purchasing alcohol in PEI, New Brunswick, Saskatchewan, Yukon, or British Columbia, you will be taxed based on the total purchase price of your liquor. This tax is:
- 5% in New Brunswick
- 25% in PEI
- 10% in Saskatchewan and British Columbia
- 12% in the Yukon.
Ontario liquor taxes are a little more complicated. They charge based on the total tax price of liquor and consider the total volume and where the liquor is purchased. You will be charged differently based on whether or not you are buying beer, wine, or other alcohol types.
In Ontario, tax rates on wine are:
- 6.1% if the wine is Ontario made and purchased at a winery retailer
- 20.1% if not Ontario made and purchased at a winery retailer.
- 9.6% if purchased at a boutique winery
- 61.5% on spirits
In Ontario, tax rates on beer are:
- 72.45 cents per liter for draft beer if made by a beer manufacturer
- 89.74 cents per liter for non-draft beer if made by a beer manufacturer
- 33.41 cents per liter for beer made in Ontario and sold at an Ontario pub. Subject to an additional 17.6 cents per liter.
- 29 cents per liter if considered a cooler
- 38 cents per liter if considered a spirit
- 28 cents per liter if considered a spirit cooler
All non-refillable containers in Ontario are also taxed at 8.39 cents.
Why are Liquor Taxes in Canada so high?
Alcohol prices in Canada are regulated under the Excise Tax Act. The primary consideration behind such high taxes is health and alcoholism in Canada.
The Government believes that if they can raise the taxes on alcohol, those who struggle with addiction will be less inclined to purchase it. In return, the rates of alcoholism will be reduced, as will the number of deaths related to alcoholism.
There is some evidence to back this, suggesting that higher alcohol prices do reduce consumption in the heaviest drinkers who experience the most harm. Research in Saskatchewan also showed that when alcohol prices were increased by 10%, there was an 8.4% drop in sales.
It’s also believed that individuals who drink to excess cost the healthcare system more in healthcare costs. The raised taxes on alcohol are considered a manner of offsetting these costs.
Other Strategies used to Reduce Alcohol Consumption
Of course, raising alcohol prices alone is probably not enough to curb alcoholism in the country. While it may persuade some people against excessive drinking, many of those who have an addiction may not be dissuaded by cost.
To further reduce alcoholism in the country, the Government also limits the time that alcohol can be sold. Research suggests that alcohol consumption is highest when liquor stores are open, so limiting them to specific hours may help to reduce consumption.
Other strategies used to reduce consumption include limiting where alcohol can be sold and restricting the advertising and marketing of alcoholic beverages.
Many people disagree with the Government’s strategies, but like it or not; taxes are what they are. So if you are visiting a liquor retailer in Canada, expect to pay heavy taxes on your alcohol. It’s meant to save lives.