Canada has a new alcohol tax.

A tax increase of any sort is certainly unwelcome news, especially in the midst of a cost of living crisis. And now the price of alcohol just went up.

Originally, the planned federal alcohol excise duty was set to go up by 6.3 per cent. However, due to backlash, the federal government has now lowered the rate and tax on alcohol to 2 per cent.

According to the Consumer Price Index, the excise tax adjusts every year by law on April 1.

Restaurants Canada, a non-profit, that has been against the originally proposed 6.3 per cent increase, called the now 2 per cent increase a positive measure.

We commend @cafreeland for reducing the planned federal alcohol excise duty to 2% - which was set to increase 6.3% on April 1. There is still much needed to revive our sector, and we look forward to working alongside the Canadian Government to get there. https://t.co/JTtTsXYG6S

— Restaurants Canada (@RestaurantsCA) March 28, 2023

So how much more is your next drink going to cost you?

The increase won't necessarily apply to the cost of the product. Rather, the 2 per cent increase only applies to the tax on beer, spirits, and wine.

But like most taxes, when costs to producers go up these costs are inevitably shifted down the supply chain so consumers end up paying more.

Revenues from federal alcohol taxes go to the Consolidated Revenue Fund, which is used to pay for all federal government expenses.