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Gov't will take in extra $121 million from tax hikes on tobacco, alcohol

Get ready to pay more — a common theme when it comes to almost everything in Canada.

Gov't will take in extra $121 million from tax hikes on tobacco, alcohol
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If you had big plans to drown your carbon tax sorrows in booze and your cost-of-living troubles in cigarettes, think again. Thanks to taxation tied to Liberal-led inflation rates, those things are going to cost more too.

The news of the coming sin tax hike was read into the public record as part of a response to an inquiry of the finance ministry by Phillip Lawrence, the Conservative MP for the Ontario riding of Northumberland-Peterborough South.

Mr. Philip Lawrence: With regard to the additional revenue generated as a result of the tax increases scheduled to take effect on April 1, 2022: (a) what is the total amount of additional revenue expected to be collected by the government during the 2022-23 fiscal year as a result of the increase; and (b) what is the breakdown of (a) by type of tax being increased (carbon tax, escalator tax on alcohol, etc.)?

Hon. Chrystia Freeland (Deputy Prime Minister and Minister of Finance, Lib.): Mr. Speaker, the Excise Act and the Excise Act, 2001 adjust excise duty rates on an annual basis for tobacco and alcohol products. Each year on April 1, rates are adjusted for inflation to preserve the value of taxing tobacco and alcohol products and ensure that the excise duties continue to meet their policy objectives. On April 1, 2022, rates will increase by 2.4%, reflecting the CPI from the previous year, ending September 30, 2021. Using the revenues from excise duties on alcohol and tobacco products received in 2020-21 according to the Public Accounts of Canada as our baseline, with regard to (a), we anticipate that the April 1, 2022, inflationary adjustment will generate in the 2022-23 fiscal year approximately $121 million in additional excise duty revenue from tobacco and alcohol products. With regard to (b), to break it down by type, this results in approximately $72 million in excise duty on tobacco products and $49 million in excise duty on alcohol products in 2022-23.

Besides the hikes to smoking and drinking taxes, the Liberals are hiking the carbon tax to $50 per tonne on April 1. Inflation in February sat at 5.7%, the highest since August 1991.

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