Alcohol tax and LCBO markup cuts pave way for potential price drops
As part of its 2025 budget, the Ford government cut taxes on spirits and beers, as well as reduced the markups the LCBO is able to charge on the products it sells.
The tax on spirits, along with LCBO tax and markup on small breweries, dropped 50 per cent. The LCBO markup on cider dropped by roughly the same amount, as well as on ready-to-drink beverages.
The changes officially come into effect on Friday, Aug.1.
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'In the face of President Trump's tariffs and tariff threats taking direct aim at our economy, we are protecting Ontario business with the largest tax cut to the alcohol industry in decades,' a spokesperson for the Ministry of Finance told Global News.
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Taken together, the government predicts the markup reductions and tax changes are worth roughly $100 million this year.
Before the changes, markup at the LCBO was significant.
Figures shared by the Ministry of Finance show, for example, the markup on spirit-based ready-to-drink products previously sat as high as 97 per cent. It will now drop to around 48 per cent.
The markup on cider will drop by 47 per cent.
The markup changes will reduce the profit the LCBO makes on the alcohol it sells, meaning that if alcohol producers don't raise their rates, prices will come down.
Reduction in the taxes charged could also bring lower prices, but one industry advocate said the savings are more likely to be reinvested.
'Breweries across the province have really been struggling — we have tariffs, we have inflation, we have insurance costs going up,' Troy Burtch, senior manager of sales and business development for Great Lakes Breweries, told Global News.
'This is like a little bit of a relief line, a safety boat. At the same time, it's going to allow the breweries to take the savings and reinvest it back into the breweries.'
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Photo by Mark Schiefelbein / AP 'Actually putting concrete actions behind the commitments is something that Prime Minister Carney can do.' Cohen also noted that Canada's supply management issues, particularly with dairy, remain politically sensitive. 'There are a whole series and host of issues that are outstanding between the United States and Canada,' he added, 'and I think bringing any of them to the table with potential solutions that would be attractive to President Trump is a good strategy and a good tactic.' This advertisement has not loaded yet, but your article continues below. Q: Do you expect the current trade talks to bleed into the required review of the U.S.-Mexico-Canada trade agreement this coming year? Do you think Trump is looking to rip that up? A: 'I think it's inevitable these negotiations will bleed into the statutorily required review of USMCA,' Cohen said. 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A: Cohen noted the trust quotient between the U.S. and Canada plummeted from about 58 per cent during the Obama era to around 10 per cent in Trump's first term, before climbing back to the mid-50 per cent range under Biden. Today it's at 16 per cent. 'That history says it'll take work, it'll take effort from the United States perspective – we'll be dealing with a skeptical Canadian audience,' he said. 'But the U.S. market is too attractive (to not repair the relationship). The Canadian market is historically too much of an integral partner within that market.' This advertisement has not loaded yet, but your article continues below. 'With a different government and a different approach, I think businesses on both sides of the border will probably be more ready to come back to the table and to engage in rebuilding the relationship. I think it's going to take more to convince the Canadian public that the United States really does care about Canada, although I think that is achievable.' 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He cited the example of softwood lumber tariffs, used by both Trump and Biden. 'It is just about indisputable that Canada, through its governmental policies by the federal government and by multiple provincial governments, unfairly favours Canadian lumber producers, creates preferential treatment for Canadian lumber producers, and discriminates against U.S. lumber producers.' This advertisement has not loaded yet, but your article continues below. 'As a result, U.S. lumber producers are disadvantaged vis-à-vis Canadian lumber producers, and the mechanism for levelling that playing field is the countervailing softwood lumber tariffs.' Cohen also said tariffs can be helpful as leverage to negotiate things like boosted defence spending for NATO. 'I think that's a good thing,' he said. But he also criticized Trump's across-the-board high tariffs, like the 25 per cent tariff on potash, an essential farming input that's scarce in the U.S., as making no sense. Q: How is your successor, Ambassador Pete Hoekstra, doing in his job? A: 'I think he's in a very difficult position because (he's not a free agent but a personal representative of President Trump, but …) he's from a border state and has a longstanding understanding of the U.S.-Canada relationship and its importance from his Michigan roots,' Cohen said, noting how the former representative for Michigan's 2nd congressional district has gone out of his way to repeatedly talk about the importance of the Canada-U.S. relationship. This advertisement has not loaded yet, but your article continues below. U.S. Ambassador to Canada Pete Hoekstra. Photo by Justin Tang/The Canadian Press/File 'I think he's doing the best job he can to continue to send a message about the value that he personally and that the country puts on the U.S.-Canada relationship.' Q: Any final advice for Canadians about their relationship with the U.S.? A: 'There's almost an inferiority complex in Canada — lines like 'we're the stepchild' or 'not big enough to matter' — I always hated that,' he said, noting how Canada undervalues its importance as a friend, partner, and ally. 'There are things Canada can do that the United States cannot, because internationally, (the U.S.) is the 800-pound gorilla. Canada, though, gets to be in conversations in the global south where it can express views about promoting democracy and democratic values that, if promoted by the U.S., would fall on deaf ears. Canada can open the door and help achieve America's No. 1 foreign policy goal, which is the promotion of democracy and democratic values around the world. ' This advertisement has not loaded yet, but your article continues below. Canada should never also never undervalue the role it has played in its actions, Cohen said. 'When the United States went into Afghanistan, Canada was the first country to join us. Americans should never forget what Canada did in the (Canadian) Caper, getting our last diplomats out of Iran safely (after the 1979 revolution), at great danger to the individual Canadian diplomats and to Canada on the international stage. 'On the one hand, be proud and recognize how incredibly important you are to this relationship … On the other hand, recognize that in tough negotiations, you may not have the best hand because of the asymmetry of the financial nature of the relationship.' 'That tension is one of the most interesting aspects of dealing with Canada.' National Post tmoran@ Read More Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark and sign up for our newsletters here. Local News Vancouver Whitecaps Vancouver Canucks Sports Crime
