Beer & the taxman's triple tipple
7 August 2018
AUGUST heralds the Australian Tax Office's six-monthly automatic ratcheting up of beer excise.
Beer drinkers are consuming moderate levels of alcohol compared to other beverages but doing a disproportionate amount of the heavy-lifting in filling government coffers.
"The latest 2016-17 data on beer and taxes is sobering. Most people are not aware that they are slugged three times by the taxman when buying their beloved brews," Brewers Association of Australia CEO Brett Heffernan explained.
"First hit is the excise on beer. This is calculated on alcohol content. Despite beer being by far the lowest concentration of all alcohol products, beer excise netted the Australian Government the biggest return of $2.38 billion.
"Not only does Australian beer excise rank among the highest in the world – despite per capita consumption of beer falling 60% over the last four decades – our excise automatically goes up every February and every August.
"Second slug is GST on the excise. That's right, consumers pay 10% tax on the tax. This reaped the Australian Government $238 million.
"Third whack is GST at the retail end. Be it at the bar or off-the-shelf, another 10% GST is paid on the wholesale price. We estimate that the Australian Government will pocket around $1.6 billion over 2016-17.
"All told, that's a tax trifecta worth a whopping $4.2 billion in just one year, just from beer.
"Beer is the drink of moderation. It is the only alcohol category providing low- and mid-strength options for consumers to control their intake. Australians lead the world in their support for these beers accounting for a quarter (24%) of all Australian beer sales.
"Yet, the absurdity of the Wine Equalisation Tax (WET) saw just $850 million collected from wine in 2016-17. There has been no increase in the WET since it was introduced almost 20 years ago. In fact, the very minor category 'other alcohol beverages' collected more in excise in 2016-17, at $923 million, than the WET reaped from the entire wine industry.
"Spirits collected the next most in 2016-17 at $2 billion in excise."
To put alcohol products in perspective...
- 2 x 375ml full-strength beer stubbies at 4.9% alcohol = 2.8 standard drinks.
- 1 x 750ml bottle of wine at 14.5% alcohol = 8.6 standard drinks.
- 1 x 700ml spirit bottle at 40% alcohol = 22 standard drinks.
"Bizarrely, it's beer drinkers who are paying the most in alcohol tax despite imbibing a fraction of the alcohol," Mr Heffernan added.
"Typically, a full-strength beer at between 4.2% and 5% alcohol, volume for volume, is one-third the alcohol content of wine. It's even less for low- and mid-strength beers, which now make-up one-quarter of all beer sales in Australia.
"Likewise, compared to the 40% alcohol content of spirits, full-strength beer is one-eighth the alcohol content of a typical bottle of vodka, rum, whiskey, etc, and less, again, for lower alcohol beers. You'd have to drink more than seven litres of full-strength beer to match the alcohol content of one 700ml spirit bottle.
"It makes no sense for Aussie beer drinkers to be footing the biggest alcohol tax bill. They've earned a reprieve for doing the right thing as responsible, moderate drinkers.
"Serious excise reform that recognises beer's unique place as the drink of moderation is possible, affordable and long overdue in Australia. The Brewers Association of Australia is currently examining a comprehensive raft of reform options to give beer drinkers the recognition and relief they deserve."
- Excise rates for Alcohol from August 2018, www.ato.gov.au/business/excise-and-excise-equivalent-goods/alcohol-excise/excise-rates-for-alcohol/
- Budget Outcome 2016-17, Table 4, Page 8: www.budget.gov.au/2016-17/content/fbo/download/02-Part-1.pdf
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