UPDATE - 2023 federal excise duty tax change

As you may be aware, on March 28, 2023, the federal government released Budget 2023 which will temporarily cap the inflation adjustment for excise duties on alcohol at two per cent, for one year only, as of April 1, 2023. This is instead of the planned 6.3 per cent increase. It is expected that the Canada Revenue Agency (CRA) will officially publish the updated rates by the end of this week.

Please see below for important information on the steps the BC Liquor Distribution Branch (LDB) is taking to ensure wholesale prices reflect the two per cent excise duty rate, as quickly as possible.

Working to adjust the excise duty rate as quickly as possible

The LDB is working as quickly as possible to adjust its systems and processes so that wholesale prices reflect the two per cent excise rate by mid April. We will advise next week of the effective date and when the updated wholesale price list will be available. In the interim, the excise rate will temporarily remain at 6.3 per cent starting April 1, 2023.

Reopening and extending the deadline for Fiscal Period 2 (P2) price changes

To provide vendors and suppliers the opportunity to make wholesale price changes as a result of the adjusted excise duty, the LDB has reopened Fiscal Period 2/May (with April 30, 2023 effective date) and extended the price change deadline to end-of-day on Monday, April 3, 2023. Any wholesale price changes made for P2 will continue to come into effect on April 30, 2023, as per the pricing calendar.

The LDB’s wholesale pricing calculators, available on the vendor-facing website, are expected to be updated by end-of-day on Friday, March 31, 2023 to reflect the two per cent excise duty rate.

Additional price freeze

As you are aware, the LDB recently implemented a price freeze on new product pricing from March 20 to March 31, 2023 while requests for new product pricing were being processed. The effective date for these product pricing requests was set for April 2, 2023. To support the LDB in adjusting wholesale prices to reflect the new excise duty rate of two per cent, another new product price freeze will be required. We expect this freeze to occur for approximately 10 days, starting Monday, April 3, 2023.

For vendors that listed new products during the recent price freeze, please note that these products will continue to be activated as of April 2, 2023, with a wholesale price that reflects the 6.3 per cent excise duty rate. As per the above information, the LDB expects to update the excise rate to two per cent by mid April, which will result in an update to wholesale prices for these new products.

What does this mean?

  • Starting April 1, 2023, the wholesale price will reflect an excise rate of 6.3 per cent.
  • By mid April, the LDB intends to update its systems so that the wholesale price reflects the updated excise rate of two per cent. We will advise next week of the effective date and when the updated wholesale price list will be available.
  • To provide vendors the opportunity to adjust pricing based on the new excise rates, the P2 price change deadline has been extended to Monday, April 3 (end of day).
  • The LDB will implement a new product pricing freeze for approximately 10 days, starting Monday, April 3, 2023.

More information on the proposed excise duty rate adjustment can be found in the federal budget at:

https://www.budget.canada.ca/2023/report-rapport/tm-mf-en.html#a95