The twice-annual beer excise is set to ratchet up again this week, finding continued cries for leniency as Australia clocks undesirably high inflation and marks the biggest annual beer tax increase in decades.
The excise duty is the tax per litre of alcohol and the rate for beer is indexed every February, and again every August, according to inflation as specified by the CPI (Consumer Price Index). A new rate comes into effect on the first day of those months, meaning a new increase as of 1 February 2023.
Products with lower ABV (Alcohol By Volume) contain less total alcohol, thus accumulating less tax, but additionally, there is a major difference in the rate attracted by different concentrations.
The lowest rate, being for beverages containing three per cent or less alcohol, (currently) sees excise of only $9.57 per litre of alcohol.
But when the ABV increases to more than three but less than 3.5 per cent, the excise increases 213 per cent by comparison, to $29.97 per litre of alcohol. At 3.5 per cent or greater ABV, it jumps another 31 per cent, to $39.27.
Chief Executive of the Brewers Association of Australia, John Preston, notes Australia has one of the highest beer excise rates in the world, and lamented at this time last year that beer drinkers were about to be hit with “the biggest beer tax increase in more than a decade”.
When the second review was due for 2022, a concerted industry voice cried out for mercy, as the step-up heralded the largest increase in more than three decades – driven by high inflation post-pandemic globally and in Australia.
This eventuated in an annual percentage increase in beer tax of 10.11 per cent. According to the ABS, during calendar year 2022, the CPI rose 7.8 per cent.
The COVID-19 disruption is recognised as the greatest influence in the growth of the ‘stay-at-home’ movement, which has brought explosive growth in delivery services, often at the expense of bricks and mortar businesses. Few sectors experienced this change in consumer behaviour more than the service of alcohol.
The Australian Hotels Association has led the industry outcry, suggesting it would benefit continued employment growth and the resurgence of hospitality for licensed venues to be relieved or exempt from the duty.
“We believe there should not be a tax on jobs and that they should be treated differently to packaged or bottled products sold in bottleshops, simply because of the labour used to pour it and the sociability of venues,” AHA CEO Stephen Ferguson told PubTIC.
Beginning 1 February, the tax excise will increase to:
ABV 3% or less: $9.92
ABV 3.5<>3%: $31.08
ABV >3.5%: $40.72
All Excise Rates can be found HERE, on the ATO website.
Note: the tax rate used to be higher on smaller kegs, less than 48 litres, but this difference was eradicated as it greatly disadvantaged producers of small batch and boutique beers.
Here is what the tax amounts to for a glass of beer, as per Australian standard measurements.
