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Published January 18, 2023

Alcohol Taxes in Canada Are Going Up: Here’s How to Cut Costs

Increased alcohol taxes in Canada mean you’ll soon pay even more when buying alcohol. Save money by opting for lower-shelf liquors and buying at duty-free shops.

In the wake of some of the highest rates of inflation in decades, Canadians can add liquor to the list of things that’ll cost more in 2023. 

There are ways to cut costs without going dry — though you may need to get strategic about how and where you spend money on alcohol.

Tax on liquor will rise by 6.3% in April 

On April 1, 2023, liquor in Canada will cost 6.3% more thanks to an alcohol tax hike implemented by the federal government. The increase is a result of an annual escalator excise tax implemented in 2017. The escalator tax allows the federal government to automatically raise taxes on alcohol in response to inflation. 

Speaking of which: Canada’s inflation rate hit a 39-year high in June 2022, and hasn’t receded much since. The elevated cost of goods and services across the country continues to put pressure on consumer finances. And this alcohol tax bump means trips to the liquor store are about to become more expensive.  

Tax will add over $50 to annual alcohol bills

Canadians of legal drinking age spent an average of $837 on alcohol from April 2020 to March 2021, according to Statistics Canada. Based on this data, the average Canadian can expect to pay an extra $52.73 annually on liquor once the new alcohol tax hike is in place.   

3 ways to cut costs and buy booze on a budget

Despite alcohol tax hikes and high inflation, there are ways to save money on spirits — though you may need to get creative.

If you think crossing a provincial border is the answer, think again. Alcohol taxes vary by province, with flat-rate and percentage-based markups that fluctuate by liquor type, volume and more. This makes it challenging to identify how much more or less you may pay to purchase liquor outside your home province. 

Instead, look to lower-shelf liquors, duty-free discounts and drink specials at bars and restaurants to cut down on alcohol costs.

1. Skip the premium liquors

Production method, age, and location often play a big role in how alcohol is priced. Vintage wines tend to be more expensive than younger wines. You’ll pay more for craft or imported beer than you will for domestic drafts. Spirits also range in price, and unless you plan to savour it straight, skip the premium stuff and opt for a less expensive bottle. 

2. Buy from a duty-free shop

Duty-free stores sell products — alcohol, jewellery, tobacco products, perfume, and other souvenirs — without added import, sales, value-added (VAT) and local taxes. The opportunity for savings at a duty-free shop is significant, especially when purchasing heavily-taxed goods, like alcohol. 

For evidence, look no further than the price differences between the government-owned and operated Liquor Control Board of Ontario and the Duty-Free shop located in Fort Erie, Ontario.

 LCBOPeace Bridge Fort Erie Duty-Free
Dillon's Unfiltered 22 Gin (750 ml)$41.95$32.95
Absolut Vodka (1L)$31.45$21.95
Remy Martin Cognac (1L)$111.45$99.95
Trius Brut (750 ml)$29.95$24.95

Duty-free stores are often found at international land borders and airports, so opportunities to take advantage of tax-free savings may be few and far between. But the next time you take an international trip, budget some time to browse the duty-free wares for potentially big savings.

3. Scout for drink specials when dining out

Expect to pay more for alcoholic beverages when dining out. In fact, you may find yourself paying double (or more) for a bottle of wine at a restaurant — at least in Ontario. If you’d like to enjoy a drink or two while out on the town, look for happy hour specials and the like. Some restaurants have discounted daily drink features, half-priced bottles of wine or two-for-one cocktails, depending on the time of day or day of the week. Taking advantage of these deals may require some planning, but the savings could be well worth the effort. 

About the Author

Shannon Terrell

Shannon Terrell is a lead writer and spokesperson for NerdWallet, where she writes about a variety of personal finance topics. Previously, she was a writer, editor and video host for financial comparison company, Finder. Shannon has appeared as a financial expert on CP24 and has been quoted in numerous publications, including Yahoo! Finance and Black Enterprise. She holds a bachelor’s degree in communications and English literature from the University of Toronto Mississauga. She’s also a published author whose work has been featured in academic journals from the University of Toronto. Shannon is based in Brampton, Ontario.

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