23 July 2020
POLITICAL leaders love getting their photo taken having a beer.
It connects them with regular people. But are we approaching a point where the political class is among the few who can still afford it?
A typical carton of beer sells for $52. Most are shocked to learn that $22.05 of that is tax. Yep, 42 per cent evaporates in tax, which is the single biggest chunk out of the price of an Aussie-made beer.
Tax costs more than the ingredients, production, packaging, freight, advertising, retail overheads or profit.
Of your 24 stubbies, 10 are shouts for the taxman.
And it seems enough is never enough. Beer tax automatically creeps up every six months.
Unbeknown to most, it has been quietly but consistently going up twice a year since 1983.
Unless the federal government steps in, it stands to go up, again, on August 3 for the 74th consecutive time.
Could there be a worse time for another tax increase?
Could there be a better time for a federal treasurer to announce the first halt to beer tax indexation in 37 years?
Aussies already pay the fourth highest beer tax in the industrialised world.
In Australian dollar terms, at $2.26 per litre, Aussies pay 15 times more than Spain (15c), seven times more than the US (31c), six times more than Canada (35c), 41⁄2 times more than France and Italy (50c) and approaching double that of New Zealand ($1.26).
In April, Germany deferred its beer tax in response to COVID-19, moving from 13c to zero.
In March, the Brits froze their beer tax at $1.52 to save local jobs.
Tax on Aussie-made beer reaps more than $2bn a year for the federal Treasury. That doesn't include the GST on the excise or the GST collected at the retail end, which comes in at another $1.5bn.
It's already a tidy earner.
So what would freezing the rate, across both beer and spirits, cost the government in forgone extra revenue over the next 12 months?
A lousy $70m. It might sound a decent amount, but in the context of the federal budget it's a rounding error.
The Brewers Association of Australia, the Australian Hotels Association, Spirits and Cocktails Australia, Australian Grape and Wine, and Clubs Australia all agree that, right now, $70m is better spent investing in jobs and hospitality rather than in Treasury coffers.
Wherever pandemic shutdown restrictions have eased, politicians of every persuasion have urged Australians back to pubs and clubs for a beer, and with good reason.
Around 500,000 local hospitality jobs have been lost.
These are typically young people, working through uni and getting their start in work.
It is often overlooked that 85 per cent of all the beer sold in Australia is made right here.
Beer has been a local manufacturing success story, but it is now taking a major body blow.
April was the worst month on record for beer sales.
So far, more than 4.5 million litres of beer has been poured down the drain.
Brewers have strived to support the hospitality sector, including crediting for returned kegs that cannot be sold, free beer deliveries and two-for-one offers upon reopening, and providing growlers to foster takeaway sales to keep pubs afloat.
Cost-of-living pressures are biting as around one million Aussies find themselves out of work, many underemployed are desperate for more hours and everyone is counting their pennies unsure of what twists lay ahead.
We are under no illusions that capping excise is a long-term fix. It isn't.
But every little bit helps and now is not the time to increase taxes.
Brewers Association of Australia
This opinion piece was published in the NT News on 23 July 2020.
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