It's time beer drinkers were served a tax break
25 January 2018
WHY do Australians pay among the highest taxes on beer in the world?
It's a fair question given the mounting pressures on modern households – rent squeeze, mortgage stress, insurance hikes, electricity... living costs keep going up, while wage growth is slow.
Some things that are in free-fall, however, are Australia's past drinking habits. So, maybe, it's time the taxman cut Aussies a little slack.
Over 9.1 million Australians will enjoy a beer with family and friends this year to celebrate life's milestones, the end of a hard working week or the Australia Day long weekend.
It's as Oz as it gets, but it isn't cheap.
A typical 24-carton of full-strength beer (represented in the bottle graphic, above) at 4.9% alcohol will set you back $47.99. Of that, $16.49 is excise, then add $4.36 in GST. Yep, $20.85 is tax. At almost half of the retail price the most expensive ingredient in beer, is tax.
Our beer taxes consistently rank in the top tier globally. There's more though, the government automatically increases beer tax every six months. And, we then pay 10% GST on top of it all.
Beer taxes net the Australian Government around $2.4 billion a year.
If you've been overseas and cracked a coldie, you already know we are paying a premium for beer at home.
Australians pay more than double the OECD average in beer tax. We pay over seven times more than Argentina, Belgium, Chile and Poland; over six times more than Austria, Hungary, the Netherlands and South Africa; almost five times more than Italy and Greece; double the beer excise paid in the US and almost double that of New Zealand.
Now, there are those who would tell you taxes need to go up because beer is too cheap. That's despite every official Australian Government key indicator on alcohol consumption being in free-fall for a decade or more.
The Australian Bureau of Statistics has charted dramatic declines in consumption per capita – which has fallen, decade on decade, for more than 40 years. Aussies drink 25% less alcohol today than in the 1970s.
The Australian Institute of Health and Welfare records underage drinking at its lowest level on record, with 82% of teens putting off drinking until after legal age – up from 54% in 2004.
Even among those teens who unfortunately did try alcohol, they are doing so later with the age of first drink now at 16 years – up from 14 years in 2004, and those drinking at lifetime risky levels plummeting from 6.4% to 1.3% over the same period.
Importantly, 83% of Australians who drink do so within the prescribed guidelines.
Meanwhile, the World Health Organisation in 2014 recorded Australia at the low end of the spectrum of binge drinking.
Compared to similar countries, we ranked 31 out of 37, scoring less than half of the binge drinking rates of Finland, Greece, Austria, Ireland, Czech Republic, Slovakia, Belgium, Estonia, Portugal, Iceland, Sweden, United Kingdom, Hungary, Denmark, France, Russian Federation, Luxembourg and South Africa.
Far from increasing beer taxes, there is scope for excise relief, especially considering beer is the drink of moderation. Typically even full-strength beer, at between 4.2% to 5% alcohol, is many times lower in concentration than other alcohol products.
Over the last 10 years our major brewers have invested significantly in low and mid-strength options. Today Australia leads the world in these products, which account for one-quarter of all beer sales Down Under.
Australians have come a long way since the days of the 6 o'clock swill. The reality is Australian drinkers are more discerning, better informed and better equipped socially regarding responsible alcohol consumption than ever before.
The message of moderation has overwhelmingly sunk in.
We're not expecting tax cuts on beer any time soon, but they deserve to be part of the mix to reward Aussies for doing the right thing.
Brett Heffernan is Chief Executive Officer of the Brewers Association of Australia.
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