No August excise hike

31 July, 2020 by Andy Young

The excise on alcohol products will not increase next week, according to the latest information from the Australian Taxation Office.

Excise rates for alcohol are indexed twice a year in line with the consumer price index (CPI). This usually means the tax on alcohol products in Australia, which is among the highest in the industrialised world, goes up every February and August.

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The second increase for this year was scheduled for Monday, 3 August, but will now not happen.

The ATO said: “The CPI indexation factor for rates from 3 August 2020 is 0.9850. As the factor is less than one, the rates do not change.”

Brett Heffernan, CEO of the Brewers Association of Australia (BA), described the news as “bittersweet”.

He said: “While good that consumers will be spared the extra tax hit, the CPI fall comes because the economy is tanking due to the pandemic.

“It would be better for the government to remove the ambiguity and uncertainty of future tax increases by freezing the excise rate for, at least, 12 months as part of the October Federal Budget. It will essentially cost them nothing to do so, but give the sector and consumers much-needed certainty.”

Several industry associations, including the BA, had called on the Government to freeze the August increase to help an industry hit hard by COVID-19 restrictions.

Earlier this month Heffernan, said: “The Federal Government has the opportunity to stop the increase as the hospitality sector recovers from COVID-19. We seek its support to do so.

“At $2.26 per litre, Aussies already pay the fourth highest beer tax in the industrialised world. They then pay another 10 per cent GST on top. A substantial 42 per cent of the price of an Aussie-made stubby is tax. A typical carton of 4.9 per cent alcohol beer retails for $52.00 – of that, $22.05 is tax. Australian drinkers are essentially shouting the taxman 10 of their 24 stubbies.

“Tax is the most expensive ingredient in Aussie beer. It’s not the inputs, production, freight, packaging, advertising or retail overheads and profits, it’s Australian Government tax.”

AHA CEO Stephen Ferguson added: “Workers across the country are doing it tough this year with drought, bushfires and now ongoing COVID-19 restrictions and tourism bans. Loading more tax on a drink doesn’t help anyone.”