Canadian Distillers Press Carney to Cut Spirits Taxes

Canada’s craft distilling industry is pressing Prime Minister Mark Carney to overhaul federal excise duties on spirits, arguing that the current tax structure leaves domestic producers at a steep disadvantage against U.S. competitors and slows investment in a sector that has struggled to scale.

The Canadian Craft Distillers Alliance said Monday that spirits excise duties in Canada are as much as 14 times higher than those in the United States and called for a progressive, volume-based system similar to the one used for beer in Canada and for craft spirits in the United States. The group said the change would help small distilleries expand, hire more workers and compete more effectively at home and abroad.

Tyler Dyck, president of the alliance, said in a statement that the current framework is outdated and unfair to Canadian producers. He said the industry is not asking for a special advantage, but for a tax structure that would put distillers on a more even footing with wine, beer and cider producers, which already benefit from reduced excise policies.

The appeal comes as Canada prepares for trade talks with the United States and as businesses across sectors face uncertainty tied to tariffs, supply chains and slower economic growth. The alliance said that if Ottawa does not act now, Canadian distillers will continue to lose market share and investment to foreign competitors.

The group said it has support from provincial craft distilling associations across the country and represents nearly 400 distilleries. It argued that a lower excise burden would encourage domestic production, especially in rural and regional communities where many small distilleries operate and where tourism and local agriculture often depend on them.

The alliance also pointed to the United States, where Congress adopted a tiered excise system for craft spirits in 2017. Industry advocates there have credited the policy with helping smaller distillers grow faster and reinvest in their businesses. Canadian distillers say a similar model could strengthen exports and help rebuild Canada’s reputation in whisky and other spirits.

Canada once had a larger global profile in whisky production, but many small producers say they now face higher costs than rivals in other markets. The alliance said modernizing excise duties would be one of the fastest ways for Ottawa to support manufacturing, innovation and regional economic development without creating new subsidies.

The federal government has not announced any change to spirits taxation. The alliance said it sees an opening for action now that Carney’s government has secured a majority mandate, arguing that there is no longer a reason to delay reform.