OTTAWA, March 31, 2026 – The federal government is set to extend its cap on annual alcohol tax increases for another two years, providing continued relief to Canada’s brewers, wineries and distilleries.
The move will keep excise tax increases on alcoholic beverages limited to a maximum of two per cent annually until 2028, according to officials familiar with the decision.
Relief Amid Rising Costs
Alcohol excise taxes in Canada are typically adjusted each year on April 1 based on inflation. However, since 2023, the government has imposed a temporary cap to shield the industry from steep increases driven by rising costs.
This cap was originally scheduled to expire this year, but Ottawa has opted to prolong the measure to provide stability to producers navigating ongoing global supply chain disruptions and economic uncertainty.
Support for Craft Brewers
In addition to extending the tax cap, the federal government is also renewing support for craft brewers. A program that reduces excise taxes by 50 per cent on the first 15,000 hectolitres of beer produced annually in Canada will now continue for another two years.
The extension is expected to benefit smaller breweries that rely on cost relief to remain competitive in a challenging market environment.
Industry Predictability Ahead of Busy Season
Officials say the decision is aimed at ensuring predictability for the alcohol sector, particularly as Canada prepares to host matches for the upcoming FIFA World Cup 2026, which is anticipated to boost demand across hospitality and beverage industries.
Political Pressure Continues
The extension comes amid ongoing calls from opposition groups, including the Conservative Party and taxpayer advocates, to eliminate alcohol tax increases altogether.
While the government has not scrapped the tax escalation policy, the continued cap signals a balancing approach—maintaining inflation-based adjustments while limiting their immediate impact on businesses and consumers.
The formal announcement is expected to be made publicly ahead of the April 1 tax adjustment deadline.