E-Malt.com News article: Australia: Full-strength beer prices to rise if government introduces new tax system

A review of the Australian tax system considered by the Federal Government would raise the price of full-strength beer as well as that of wine, The Sunday Age communicated on January, 17.

In a change that could boost the budget bottom line by as much as A$2.9 billion over four years, a review of the tax system headed by Treasury boss Ken Henry is believed to recommend replacing Australia's antiquated and complex alcohol excise regime with a simpler ''volumetric'' system based on alcohol content.

Treasury has proposed a stepped approach, with tax rates progressively increasing according to alcohol content. The thresholds are believed be 3.5 per cent, 5 per cent, 7 per cent, 10 per cent, 15 per cent and 22 per cent, it is reported.

Australia's alcohol excise regime is one of the most complex in the world, with an array of rates and rules for different alcohol products. The amount of excise on beer, for example, varies dramatically depending on whether it is sold in a keg or a bottle.

Small wineries receive generous tax concessions, which have been blamed for propping up uneconomic businesses and encouraging a grape glut, yet micro-breweries must directly compete with multinationals such as Fosters and Lion Nathan.

An analysis by accounting firm KPMG for the Distilled Spirits Industry Council of Australia found that a proposal for a volumetric tax with seven excise rates for different alcohol thresholds would lift full-strength beer prices by about 5 per cent, or A$2 a case.

Full-strength beer typically has an alcohol content of around 5 per cent and light beer about half that.

The review is currently in Treasurer Wayne Swan's office, with a response likely in about March.


20 January, 2010