Huge increases in inflation this year have been stressful enough to drive a person to drink; but even that’s getting more expensive.

And the Yukon Party wants Ottawa to intervene.

A federal tax on alcohol is tied to the Consumer Price Index (CPI).

With inflation going up in leaps and bounds this year, the Yukon Party is asking the territorial government to step up for the Yukon’s tourism and hospitality industry, as well as its consumers.

The opposition party wants the territorial government to request that the federal government suspend the excise tax on alcohol while businesses face inflationary pressures.

“This has been a tax that the hospitality industry, as well as consumers have been calling for the removal of over the past few years,” Yukon Party leader Currie Dixon said in a news release last Thursday.

The release noted that, based on the current national CPI, beer prices could rise by over six per cent in April 2023.

“With inflation levels not seen in decades, it is imperative the federal government have a second look at this tax and remove it at least for the short term,” Dixon continued in the release.

“Businesses in the hospitality sector, as well as Yukoners, are grappling with inflation, and this is one more unnecessary pressure.”

The national CPI for October, as reported by Statistics Canada, is 6.9 per cent.

Beer Canada, an advocate for Canadian brewers and beer consumers, said in November it expects beer prices to go up 6.3 per cent.

Following the federal government’s Fall Economic Statement, the group issued a release asking Ottawa to “freeze beer taxes.” 

In a statement emailed to the Star last Thursday, Tourism and Culture Minister Ranj Pillai, who is also the minister responsible for the Yukon Liquor Corp., didn’t indicate the government would support the Yukon Party’s request.

He emphasized that the issue is a federal one, saying he would bring it up in discussions with federal ministers this week in Toronto when he meets with the Committee on Internal Trade.

“The Government of Yukon continues to do all it can to support liquor licensees,” Pillai said in the email.

“In addition to a number of supports provided throughout the pandemic, a new liquor pricing structure was implemented in October 2021.

“This adjustment to our wholesale price from a 12 per cent wholesale discount to a 17 per cent discount represents approximately $1.1 million more revenue per year in the pockets of our licensees.”

The Yukon Party request is the latest in a line of party demands this fall for the territorial government to bring Yukoners some financial relief in the face of skyrocketing inflation. 

The Yukon Party asked in early November that the territorial government write to Ottawa and ask for an exemption on carbon pricing for home heating fuel.

One Yukon fuel supplier told the Star at the time that some of its customers were paying upward of $2,000 to fill their tanks.

The party also demanded the Yukon government stop tying the territory’s minimum wage to Whitehorse’s annual CPI, worrying it could lead to a $1.18-per-hour wage increase in April, a boost they said would be a shock to business owners.

Inflation this year hasn’t just caused the national CPI to climb.

The Bank of Canada increased its key lending rate to 3.75 per cent in October.

The rate was 0.25 per cent in March, but in an effort to cool inflation by discouraging borrowing and spending, the Bank has raised it six times since then – and is expected to do so again on Wednesday.

Yukon Brewing owner Bob Baxter told the Star last Thursday he’d like to see the federal government reconsider the CPI’s relation to tax on alcohol, but not because of recent jumps in inflation. 

“I don’t think tax hikes should be a default,” he said, adding that any raise to the alcohol tax should be debated. 

But he said the tax he pays to brew his beer isn’t nearly as concerning as the rising costs of beer grains – a 30-35 per cent spike this year – or the inflation-caused rise in fuel and distribution costs.

He said most supplies, from beer cans to malt, have to be freighted in, and that’s become far more expensive this year.

The alcohol tax, he acknowledged, is something the federal government can act on immediately to provide quick relief to businesses, while other price jumps are harder to control.

But he reiterated that his concern with the tax and its relation to the CPI is more on principle right now, and not so much a present financial worry.

The Yukon Chamber of Commerce is more concerned. 

Dylan Soo is one of the vice-chairs of the chamber board. He said all businesses would be “highly concerned” about any further potential cost increases.

The worst of the COVID-19 pandemic lockdowns hit many businesses hard, he said, and times are still tough even as the industry prepares for a return to a normal summer season.

Rising inflation this year, supply chain issues, as well as higher labour and insurance costs have put a squeeze on business owners, Soo said. But the food service sector, he noted, is especially vulnerable.

“Restaurants and bars, in particular, operate in the best of times, on slim margins.”

Soo said restaurants and hospitality businesses are already facing a possible rise in the minimum wage tied to the CPI, and increased alcohol costs are the last thing they need.

A higher tax on drinks leads to two things, he said – either costs are covered by reducing service and staff, or they’re passed on to the consumer.

Either way, Soo said, it’s a “dangerous game” that could turn off customers and hurt businesses.

The liquor, beer and service industries have criticized the alcohol excise tax since it was tied to inflation in 2017.

Beer Canada claimed in 2018 that government taxes were accounting for almost half the price consumers paid for a case of beer. 

A 2021 study from the Canadian Institute for Substance Use Research found that advocates like Beer Canada, as well as brewers and distillers, have exaggerated how much of the consumer cost of alcoholic drinks are government taxes. 

“In all cases,” the 2021 study states, “the rate of total sales tax and excise taxation are mostly between 20 per cent and 30 per cent of final retail prices, well below the industry claims.”

The study concluded that there was actually “ample room” for raising excise taxes on alcoholic products.

“This would improve public health outcomes and compensate for lost revenue due to past failures to index alcohol excise taxes to the cost of living,” the report said.

The study didn’t indicate, however, what the outcomes for brewers, distillers, retailers and alcoholic establishments might be.