UK Government slashes draught beer tax whilst Australia surges up the global tax rankings.
UK Chancellor of the Exchequer, Rishi Sunak MP, used his Budget announcement yesterday to slash the tax on draught beer to support the hospitality and brewing sectors.
The move came after over 100 British Conservative MPs wrote to the Treasurer last week calling for immediate action in the Budget to support the UK’s pub industry which has been hit hard by the pandemic.
In the Budget the Chancellor announced that from 2023 he would reduce the rate on beer sold through pubs by 5 per cent by creating a new draught beer rate. The Chancellor said this was the biggest tax cut for beer in 50 years and that it was “a long-term investment in British pubs of £100m a year, and a permanent cut in the cost of a pint by 3p.”
The Chancellor also announced that he was cancelling the planned tax increase for beer set to take effect immediately which will freeze the beer duty rate for a further year.
This welcome decision comes as new research released by the Brewers Association today shows that Australia is set to have the third highest tax rate on beer in the developed world by 2023.
The research, conducted by the School of Economics at the University of Adelaide, found that Australia’s beer tax rate, currently the fourth highest in the OECD, will overtake Japan’s in October 2023. This is due to the twice yearly beer tax increases in Australia and a beer tax cut that has been announced by the Japanese Government.
At that stage only Norway (1st) and Finland (2nd) out of the entire OECD will have higher beer taxes than Australia and Norway reduced its beer tax rate by 10 per cent this year narrowing the gap with Australia.
Commenting on the UK Budget decision and this research, CEO of the Brewers Association, John Preston said:
“This is a fantastic decision by the British Government which recognises the pain and damage that has been inflicted on the hospitality sector in the UK.”
“Here in Australia our pubs and clubs have done it just as tough with longer lockdowns and ongoing restrictions. What we are seeing though is Australia’s already high beer tax moving in the wrong direction.”
“As other countries cut their beer tax to help the hospitality industry or ease pressure on consumers ours still goes up twice a year. We are totally out of step on beer tax with comparable countries like the UK and on a different planet from major beer producing nations such as Germany, the US and Belgium where the rate is less than a quarter of what we pay here.”
“Australian beer drinkers have the earned the right to a reduction in beer tax following decades of evidence of more moderate beer consumption in Australia, including the world leading take up of lower strength alcohol beers.”
“Pubs, clubs, brewers and beer drinkers need action now to get the beer tax rate back to a sensible level and the Brewers Association is calling on the Australian Government to substantially cut the draught beer excise rate.”
Media enquiries: John Preston, 0416 209 351