Beer excise
Excise is a major issue for all breweries, especially small ones. For beer with an alcohol content of about 4.5% the current (April 2010) rates of excise are about $1 per litre for draught beer, and $1.40 per litre for packaged beer.
The reason for the difference goes back to the federal election of October 1998. The Coalition government campaigned for re-election with a new tax system, the centrepiece was the GST. Prime Minister John Howard promised the price of draught beer would not increase under the GST. When the GST was introduced on July 1st 2000 the price of draught beer did go up and the Government moved very quickly to fiddle the excise rates to bring it back down to honour John Howard’s election promise.
The fiddle was to introduce two tiers of excise rates based on container size, greater than 48 litres and less than 48 litres. The 48 litre plus rate was calculated so that the price of draught beer returned to pre-GST levels.
Breweries must pay excise as beer leaves the brewery premises. Usually excise is paid on Monday afternoons for beer sold the previous week. Because breweries typically sell to trade on account they must wait several weeks before getting paid. In the meantime they must carry the cost of excise.
Australian microbreweries produce an average of about 2,000 litres of beer per week. If it takes a month for the brewery to get paid then they will have about $10,000 of cash tied up in excise payments with the Australian Tax Office. If sales are growing then the brewery must stump up the extra cash to pay the excise on new sales. Brewing is a cash hungry business.
- Beer excise rates
A quick explanation of how excise is structured and the current excise rates. - Henry tax review submissions
Here are some of the submissions to the Henry tax review from groups interested in alcohol and tax.
