Senator Quinn: Senator Gold, while I understand that you’re saying that it’s not a large impact, I’m going to respectfully disagree. In some cases, it’s a seven-figure number, and that would be in a medium-sized brewery, such as Moosehead Breweries in Saint John. For certainty and as part of their business planning, if the government is unable to respond in a favourable way, would it not be reasonable to at least convey my concerns to the Minister of Finance that the increase of the alcohol excise tax tied to the inflationary rate will have an unintended consequence that will seriously impact the competitiveness of Canadian businesses and lead to job losses throughout the supply chain?

Hon. Jim Quinn: My question is for Senator Gold. Senator Gold, in 2017, Parliament passed the escalator tax on alcohol products, marking the first time parliamentarians do not have a vote on the annual increase of the excise tax on beer, wine and spirits. Instead, the increase is tied to inflation effective April 1 of every year.

Senator Gold, I applaud the federal government’s initiatives to ease the significant inflationary pressures on Canadians and Canadian businesses. However, with inflation likely being in excess of an average of at least 6%, if not more, the automatic escalator tax will seriously impact the competitiveness of Canadian business. In 2017, I don’t believe that departmental officials and the government expected or planned for the effects of inflation on this escalator clause. This tax ripple through the supply chain will lead to jobs at risk, which I’m also certain will have been an unintended consequence. Why not place a 2% floor on this tax while accruing regional revenue to the federal government, and while giving government initiatives an opportunity to lower inflation without adding fuel to the inflationary fire?

And will the government commit to not imposing an automatic escalator excise tax for 2023?

Hon. Jim Quinn: Honourable senators, my question is for the Government Representative in the Senate. Senator Gold, there is a growing concern across the wine, liquor and beer industry that next year’s automatic excise duty rate increase, which is tied to inflation, could reach or likely exceed 6%. With respect to beer alone, this would be the equivalent of some $41 million in new taxes. The potential 6% increase is due to the implementation of the automatic escalator clause that was introduced in the 2017 Budget Implementation Act, despite concerns of the Senate at the time.

Former Senator Day said it:

. . . takes away power and responsibility of parliamentarians to oversee government expenditure, to act in the interest of the people of Canada to protect the public purse.

In my view, this starts to distort the constitutional principle of no taxation without representation. By creating an administrative efficiency to avoid going before Parliament yearly to increase taxes, we are now faced with a situation of inflexibility with rising rates. This, I believe, distracts or takes away from what was intended in 2017, when inflation rates were low, and we were experiencing significantly lower interest rates.

Senator Gold, will the government repeal the escalator clause related to the excise tax on alcohol products?