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Why your brew at the pub could now cost more

  • From today, February 1, the ATO will increase the excise duty rate per litre to keep up with inflation.
  • Aussies pay the 4th highest beer tax in the industrialised world, paying 17x more than the Germans.
  • Taxes on beer drinkers nets the Australian government about A$3.6 billion a year.

Beer is oft-times called liquid gold, dating back to the ancient Egyptians, however the reason nowadays could be more from how lucrative it is from a government tax perspective.

Australians can expect to pay more for tap beer at the local watering hole if a new government tax increase is passed onto the consumer.

From today (February 1) the Australian Taxation Office (ATO) will increase the excise duty rate per litre of alcohol to keep up with inflation, meaning your next pint at the pub could cost you more.

What commercial premises and brewers pay per litre of alcohol will increase depending on which type of product they brew. As an example, a keg of beer between 8 litres and 48L where the alcohol volume does not exceed 3% will incur an excise duty of A$9.20 per litre of alcohol, according to the ATO.

That same tax is currently priced at A$9.01/L of alcohol.

Many commercial kegs are about 50 litres and therefore where the alcohol volume is between 3% to 3.5% the excise duty will move from A$28.23/L of alcohol to A$28.82/L. If these same commercial kegs were exceeding 3.5% then the excise duty increases from A$36.98 to A$37.76.

The Brewers Association of Australia says taxes on beer drinkers nets the Aussie government about A$3.6 billion a year. Of that, more than A$2 billion is in excise, A$201 million in GST on the excise, then a further A$1.3 billion in GST at the retail end.

Australians pay the fourth highest beer tax in the industrialised world, paying A$2.26/L of alcohol. Norway tops the list, paying A$3.62, followed by Japan which pays A$2.92, and then Finland pays A$2.46. In Germany it’s just A$0.13 – some 17 times less than Australia.

Tax accounts for almost half (42%) of the price of a typical carton of full-strength beer. For example, on a carton that retails for A$52, just over A$22 is tax, according to the Brewers Association of Australia.

Just yesterday, the Australian Hotels Association, Clubs Australia, and the Brewers Association again called on the federal government to deliver draught beer tax relief, arguing that a 50% draught beer tax reduction would lower tax bills by A$500 for an average pub, and would help venues to bring back customers.

Domestically made beer in Australia underpins A$16 billion a year in economic activity, the Brewers Association of Australia says. 

The market size of the beer manufacturing industry is expected to increase 15.3% in 2022, an IBISWorld report forecasts. The domestic beer industry is the 18th ranked manufacturing industry by market size and the 202nd largest in Australia.

Beer, spirits, and other excisable beverages are all excisable alcohol products and are generally subject to excise duty if you manufacture or produce them in Australia. Wine is subject to wine equalisation tax, not excise duty.

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