A small Calgary brewery is cheering the government's decision to amend how beer is taxed in the province.

Until now, many Alberta beer brewers capped their production at 19,999 hectolitres because if they made 20,000 or more, the tax per litre would more than double.

The new provincial budget creates a new tax regime for breweries that raises taxes incrementally as production totals rise.

"This is fantastic news, absolutely," said Graham Sherman, co-founder of Tool Shed Brewing Co.

"The new, graduated increase, not only does it mean we don't have to cap ourselves … but it also means that, as of today, our markup just got cut in half because we fall into that first category."

Liquor tax increase

The province is hiking the tax on liquor by five per cent, or about $0.21 for a case of beer.

But that increase only applies to imported beer and beer producers making over 200,000 hectolitres, Sherman said.

"We've been given an opportunity by our government to succeed as local, craft breweries," he said.

The new tax regime is just the latest in a string of relatively recent adjustments made by the Alberta Gaming and Liquor Commission (AGLC) that have made conditions more favourable for smaller producers, according to Sherman.

"Ever since we've started, they've made change after change supporting small, craft, local beer," he said.

"So this is just another surprise, because no one really saw this one coming."

OId rules

When Sherman's company began brewing beer a few years ago, the province's minimum production requirement was 500,000 litres.

Unable to come even close, Tool Shed Brewery improvised.

"So we ended up driving to B.C., brewing our beer there, driving home and then importing our beer into Alberta," he said.

"And it's just a crazy thing that that's how the government used to work, supporting imported beer over local beer."

Sherman says his company plans to gradually increase its output, which is currently about 5,000 hectolitres.