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Adelaide’s party hub Hindley Street during the lockdown (Photo: E. Hebeker)
24 July 2020

Australian brewers call for freeze on beer tax hike

Australia | Brewers, publicans and other representatives of the country’s alcohol industry are calling on the government for the beer tax increase to either be scrapped or for the tariff to be frozen at its current level.

The lockdowns across Australia have devastated their sector and the change to the tax would support its recovery.

The Australian Federal Government currently taxes an average of USD 2.26 per litre of beer, which is set to increase to an unknown amount on 1 August 2020 when the government plans the next budget.

The beer tax is hiked automatically every six months in line with Consumer Price Index increases. This mechanism was introduced in 1983 and has seen the price of beer creep up little by little every half year. However, consumers also pay another 10 percent GST on top of everything, including the excise tax, at the retail end. This makes beer very expensive.

Half the price of beer is tax

Brewers say that even without the beer tax increase, Australians already pay the fourth highest tax on beer in the industrialised world after Norway (USD 3.46), Japan (USD 2.92) and Finland (USD 2.46). Last year, the total tax load accounted for almost half (42 percent) of the price of a typical carton of full-strength beer. If a carton of beer, on average, retails at AUD 52 (USD 37), a whopping AUD 22 is tax.

The shutdown of pubs, bars and restaurants has cost brewers and publicans dearly. Brett Heffernan, CEO of the Brewers Association, said that total beer sales in Australia were down 44 percent in May compared to May last year.

“Right now, consumers don’t need higher taxes. We are in an environment now where politicians of every persuasion are encouraging people to go down to their local to support local jobs. It seems contradictory to be jacking up a tax on having a beer with your mates,” Mr Heffernan was quoted as saying.

Mr Heffernan estimated that the amount of revenue forgone by a 12-month freeze on inflation-linked rises would be about AUD 70 million (USD 49 million). “We would strongly argue at this time that AUD 70 million is much better off in punters’ pockets than in Treasury coffers,” he said.

Earnings from alcohol excise

The alcohol excise raised about AUD 4 billion (USD 2.8 billion) for federal coffers in 2018-19, according to the Brewers Association, which represents brewers Carlton & United, Lion and Coopers.

Wine is taxed differently and does not face the same excise regime but Australian Grape and Wine, which represents wine grape and wine producers, supports the push.

In fact, cask wine retails at a far lower price than beer. A 5-litre cask of wine can be found regularly for less than AUD 20 (USD 14), and has more alcohol than a carton of beer.