If you think that new cut in the Goods and Services Tax is going to save you money on your smokes and booze, think again.
The federal budget tabled Tuesday set small increases in so-called sin taxes that will wipe out the GST savings on tobacco products and alcohol.
While the Conservatives are reducing the GST to 6 per cent from 7 per cent, they are making up ground elsewhere.
The excise duty for a pack of cigarettes will increase seven cents, and it will increase 10 cents for a litre of wine. Those duties are levied on manufacturers, while consumers are charged GST.
The government cites two reasons for the hike: health concerns, and the need to pay for the GST cut.
“Price is one of the key factors affecting tobacco consumption,” says the budget document.
“(This ends up) affecting both the decision to smoke and the frequency of use by continuing smokers.”
The increased excise duties vary from one product to another, and are designed to equal the total amount of the government's GST promise.
Wine, beer and spirits will also be subject to tax increases.
The federal excise duty on wine will increase a dime to 62 cents per litre, and beer will see an increase of about one penny to 10 cents a bottle.
