It is predicted that Australians will soon be paying more for tap beer at the pub if a new government tax increase ends up being passed onto the consumers.

On Tuesday 1st February 2022, the Australian Tax Office (ATO) announced that it will be increasing the excise duty rate per litre of alcohol by a factor of 1.021 to keep up with inflation.

This means that the amount of tax commercial premises and brewers pay per litre of alcohol will increase depending on which product they brew.

For example, a keg of beer between 8 litres and 48 litres where the alcohol volume does not exceed 3 percent will incur an excise duty of $9.20 per litre of alcohol.

At the present time the same excise duty is priced at $9.01 per litre of alcohol.

For kegs over 48 litres (many commercial kegs are approximately 50 litres) where the alcohol volume is between 3 percent and 3.5 percent, the excise duty will move from $28.23 per litre of alcohol to $28.82 per litre of alcohol.

The Australian Hotels Association, Clubs Australia and the Brewers Association have all established a national campaign to put pressure on the government to cut the twice-yearly tax hike on draught beer.

“Twice a year for 35 years pubs and drinkers have copped a tax hike on draught beer. This year — after our members have done the right thing throughout the pandemic and at a time when jobs and businesses hang in the balance, we ask that pubs and drinkers get a break,” says Queensland Hotels Association chief executive Bernie Hogan.

Echoing similar concerns, John Preston, Chief Executive of the Brewers Association of Australia, asserts that the hospitality industry is very concerned about the rising cost of ordering draught beer at your local pub.

“We are very concerned that on 1st February the Australian Government will hit beer drinkers with the biggest beer tax increase in more than a decade. It’s important to understand that what we are talking about is an increased tax on the tap beer sold in pubs and clubs,” says John Preston, Chief Executive of the Brewers Association of Australia.

The organisations are pushing for the tax levy on beer kegs to be slashed in half, from $70 to $35.

It is reported that Australia has the fourth-highest tax on beer in the world, behind Norway, Finland and Japan.

The way alcoholic beverages are taxed in Australia varies markedly. Generally, all beer and spirits are “excisable alcohol products” and an excise duty must be paid if they are manufactured or produced in Australia.

According to data from the ATO, wine is subject to wine equalisation tax, not excise duty.

The excise duty rates for alcohol manufacturers are indexed twice a year on the first of February and August in line with the consumer price index (CPI).

Tony Fyfe, co-owner of Hemmingway’s Brewery in Cairns, supports the campaign to slash federal beer taxes, saying a reduction could help the struggling hospitality industry after it has continued to suffer for past two years during covid-19 restrictions and lockdowns.

“We’re not asking for a handout, what we’re asking for is a reduction of tax to help the hospitality businesses get through this period. Over the last two years, we’ve done the right thing, followed the government mandates, closed down when we had to and operated under really difficult restrictions. This is just another kick in the guts, it’s really, really tough to work with,” says Tony Fyfe, co-owner of Hemmingway’s Brewery.

The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)

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Craig is the principal consultant of C&D Restructure and Taxation Advisory and has been working in the industry since 1999. Having established C&D Commercial Partners in 2015 the precursor to the current business.

Post Author: Craig Dangar

Craig is the principal consultant of C&D Restructure and Taxation Advisory and has been working in the industry since 1999. Having established C&D Commercial Partners in 2015 the precursor to the current business.

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