Ontario’s alcohol industry is getting a significant financial reprieve as sweeping tax and markup reductions come into effect. The Ford government’s 2025 budget includes major cuts to alcohol taxes and LCBO-imposed markups, potentially paving the way for lower prices at the register while giving struggling breweries a lifeline.
Effective August 1, the tax on spirits has been halved, alongside a 50 per cent reduction in LCBO markups for small breweries. Cider and ready-to-drink beverages will see similar reductions, with the markup on spirit-based RTDs falling from 97 per cent to 48 per cent and cider dropping by 47 per cent.
A spokesperson for Ontario’s Ministry of Finance said the move, estimated to be worth around $100 million this year, is a direct response to the economic strain caused by U.S. President Donald Trump’s tariffs targeting Canadian industries. The changes aim to protect local businesses and preserve Ontario’s alcohol production economy.
Previously, the LCBO’s markup structure significantly inflated consumer prices. Now, with reduced profit margins on alcohol sales, prices could decline — provided producers don’t raise rates. However, some industry players believe the financial breathing room will be used more for internal reinvestment than price cuts.
Troy Burtch of Great Lakes Brewery called the tax cuts a “relief line” that comes at a critical time. “Breweries across the province have really been struggling — we have tariffs, we have inflation, we have insurance costs going up,” he said. “At the same time, it’s going to allow the breweries to take the savings and reinvest it back into the breweries.”
While Ontarians may not immediately see drastic savings on store shelves, the policy shift signals meaningful support for local producers and the potential for long-term consumer benefits.