Campaign to cut excise is a lifeline to Australian on-premise
Australia | The Australian Hotels Association and the Brewers Association continue to campaign for a cut to the increased excise on draught beer, which came into effect on 1 February 2022. Their campaign is in support of pubs, and clubs, many of which are small businesses that have endured the most difficult trading conditions because of the pandemic.
The campaigners hope to sway the government, whose Federal Budget will be announced on 29 March 2022.
During the pandemic, on-premise businesses have lost AUD 2 billion (USD 1.45 billion) in beer sales alone. The Brewers Association believes that a 50 percent reduction in draught beer tax would be a responsible and effective way for the Federal Government to give beer drinkers a break after 35 years of tax hikes and provide much needed support for pubs and clubs.
The organisations say that their proposal to cut the excise will reduce the cost of a beer by AUD 0.30 to AUD 0.40 (USD 0.29) and save brewers an estimated AUD 150 million (USD 110 million) in tax.
They emphasise that they are only talking about the on premise. They are not seeking a general tax cut, which could lead to cheaper packaged alcohol in supermarkets.”
What the critics say
More than 80 community leaders and organisations have signed an open letter to the Treasurer, Josh Frydenberg, asking the Government to abandon any plans to cut the price of alcohol because of the risk to the health, wellbeing, and safety of Australians.
Spirits producers were also up in arms against government intervention, albeit for different reasons. “Why would you deliver a tax cut that ignores the choices of nine out of ten Australian women?” said Greg Holland, CEO of Spirits and Cocktails Australia, another trade body.
Tax cut on beer is sexist
Mr Holland was quoted as saying: “Imagine Scott Morrison [the Prime Minister] or Treasurer Josh Frydenberg walking into a bar and shouting a round of beers for a bunch of blokes, while turning their back on the women enjoying a quiet gin and tonic or cocktail after work. It would be considered outrageously sexist and out of date – but that is exactly what this proposal represents.”
Mr Holland called on the Treasurer to apply his tax discount evenly across the alcohol industry. It is not a popular tax to begin with, as it cripples Australian distillers.
Australia’s taxes on beer and wine are among the highest in the world, with about half of the retail price of beer, and more than half the retail price of a bottle of booze going to the government in tax. Excise tax rises every six months, in line with inflation.
Wine industry keeps quiet
Interestingly, the Australian wine industry is very quiet in this discussion. They have a sweetheart deal – the Wine Equalisation Tax – that makes wine the best value by volume of alcohol.
In 2021, the alcohol tax paid on spirits was approximately AUD 1.10 per standard drink. By comparison, the tax paid on a standard drink of wine was just under AUD 0.20. The tax on beer came to AUD 0.49.
Therefore, you can buy a 5-litre cask of white wine at 11 percent ABV for under AUD 20 (USD 14.80), whereas a standard carton of beer of 9 litres at 4.5 percent ABV costs AUD 50 (USD 36.90).
