Alcohol tax and LCBO markup cuts pave way for potential price drops
Major changes to the taxes and fees paid on alcohol in Ontario have come into effect, offering a boost for tariff-hit drinks makers and a potential price drop for customers.
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.
“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.
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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