Last call for cheap beer? Aussies to pay more for booze

Published on February 01, 2022 09:00 AM SAST

Highlights

ATO hikes excise duty on alcohol from 1 February 2022.
Tax on alcohol brewers and commercial premises is now in line with the recent CPI surge.
The Australian beer tax is likely the fourth highest in the world.

Beer at your nearby pub will not be cheap anymore. Starting today, you need to pay more than you ever did in the last ten years! The Australian Taxation Office (ATO) has introduced the biggest tax hike on beer in over a decade.

Why has ATO suddenly hiked duty on beer?

As mentioned on the ATO’s website, excise duty rates in Australia are indexed twice yearly. The duty is indexed for alcohol manufacturers on 1 February and August. The indexation tends to bring alcohol prices in line with the consumer price index (CPI).

On Tuesday last week, the Australian CPI has surged by a 1.3%. The booming property and fuel prices have pushed annual growth numbers to 3.5%. The ATO has increased the excise duty rate on each litre of alcohol by a factor of 1.021.

How expensive is beer now in Australia?

With today’s excise duty hike, the tax charged on commercial premises and brewers of alcohol will now depend on the product being brewed. Tax paid by them on each litre of alcohol will depend on the alcohol they make.

The tax charged on brewers is often forwarded to the consumer. Now, often commercial kegs used by local pubs and clubs are around 50 litres. So, beginning today, a keg of 8-48 litres of beer, where alcohol volume is below 3%, will attract excise duty of AU$9.20 per litre. It was earlier drawing just AU$9.01 a litre of duty. Kegs above 48 litres, with an alcohol volume of 3 to 3.5%, duty drawn will be AU$28.82 a litre. It has moved up from the previous AU$28.23 per litre.

Also read- Is an interest rate hike on the way in Australia?

Is the alcohol industry happy with ATO’s duty hike?

The alcohol industry has time and again called for a tax slash from the Government. The industry is going through various difficulties from Covid-induced lockdowns. Even ATO has seen that pubs and clubs have sold fewer pints of beer between July to September 2021. Compared to the same period in 2019, before Covid, the sales have dropped.

The current rate hike is to hit Australian beer drinkers hard. The Brewers Association of Australia thinks that the hike is not sustainable. While other countries reduce beer taxes to support pubs and brewers, ATO has hiked the duty. The Australian beer tax is likely the fourth highest in the world. Therefore, the association wants the Government to give pubs and clubs at least a fighting chance.

Also watch- Australian Election 2022: Why tax reforms should be a hot topic

Bottom line-

The ATO seems to have followed their usual, hiking the customs duty bi-annually. However, the difficulties in business faced by the alcohol brewers and alcohol service industry seem to have been overlooked. The ultimate burden has thus fallen on the consumers.

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Sukriti Nair

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Sukriti Nair - Junior Analyst
204 Posts
Sukriti has a keen interest financial research and analysis, financial markets and global financial developments. She has content writing experience in Finance and Economics. Her industrial and internship exposure includes Infrastructure, Pharmaceuti...

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