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Sampling local craft-brewed beers and regional wines on your wanderings is part of the joy of travel – but foreign visitors are often stunned by the price of beer and other alcoholic drinks in Australia.

As Australia seeks to attract more visitors, one stumbling block is the price of beer, due largely to the fact that Australians pay the fourth highest tax rate in the world on it – 18 times more than Germany and eight times more than the US. Even worse, the tax rate rises again today.

In similar vein, travellers from Australia strike some bizarre anomalies overseas. How can Coopers ale, brewed in South Australia, be so much cheaper in New Zealand than it is anywhere in Australia?

It’s not just beer. Australian wines are far cheaper in New Zealand’s supermarkets than in Australia. Sometimes the price difference is 40%.

In the US, you can buy from any general grocery store a phenomenally good American boutique beer at a price which seems incredible to an Australian.

In Hawaii recently, I bought an excellent strong Californian craft beer, Sierra Nevada Torpedo Extra IPA (7.2% alcohol by volume) for USD 9.99 for a 6-pack at the local ABC store. That price was worth about AUD 13.50 at the time. The equivalent in Australia would cost at least double that, probably more.

(Just as a passing note, you can get a quart of Russian vodka in the same ABC store for USD 20. Not that I bought it!)

Vodka aside, the latest data on beer tax reveals Aussies are paying the fourth highest beer tax rate in the world. That’s startling enough, but the research also shows that, compared to countries with similar economies, Aussies pay by far the highest proportion of their incomes in beer tax.

As of today, the tax goes up yet again, courtesy of an automatic CPI increase that slugs beer drinkers every August and February.

Brewers Association of Australia chief executive Brett Heffernan explains: “It’s already a hefty tax at AUD 2.19 per litre for packaged beer.

“Today’s tax hike on beer will make a night with family or friends just a bit more of a stretch for many Australians.

A variety of Coopers six-packs on sale in a New Zealand supermarket, all selling at under NZD 15 – much cheaper than in Australia, the country where they are made

“The CPI increases may not sound like much, but these six-month Government increases in beer tax are really adding up. Tax is already the biggest cost in the price of an Australian-made beer, accounting for almost half (42%) of the price of a typical carton of full-strength beer. Of the AUD 51.00 retail price, AUD 21.35 is tax.

“Obviously, from Monday [today], the tax on beer drinkers cuts that little bit deeper. Along with Norway, Japan and Finland, Australians pay the highest beer tax in the world. We then pay another 10% in GST, including GST on the beer tax itself, at the retail end.

“Calls for a mere freeze in the six-monthly CPI hikes to beer tax just won’t cut it. All that does is lock-in the unreasonably high taxes Aussies are already paying. It gives punters no price relief.

“Only by addressing the rate of beer tax, which is way out-of-whack with the rest of the world, can Australians get the relief they deserve.”

New analysis by an economist, Emeritus Professor Kym Anderson from the University of Adelaide, compares Australian beer tax with OECD and EU countries.

“In Australian dollar terms, at AUD 2.19 per litre in tax for packaged beer, Aussies pay more than three times the weighted OECD and EU member average of AUD 0.70,” Professor Anderson said.

“It will come as no surprise to Australians who have travelled and noticed the price on a beer overseas compared to what they pay at home. The key reason for the difference is the greater rate of beer tax in Australia.”

One of America’s top craft beers, Sierra Nevada Torpedo Extra IPA, about US$10 for a six-pack in the US and worth every cent. Beer in Australia is taxed at eight times the rate that applies in the US.

 

Looking at countries we typically compare ourselves with, Aussies pay many times more in beer tax:

  • 18-times more than Germany (AUD 0.12 per litre),
  • 15-times more than Spain (AUD 0.14),
  • 8-times more than the US (AUD 0.28),
  • 6-times more than Canada (AUD 0.37),
  • around 5-times more than France (AUD 0.47),
  • almost double that of New Zealand (AUD 1.18);
  • almost two-fifths more than the UK (AUD1.37).

Heffernan says the analysis brings Australia’s beer tax regime into sharp focus.

“Australians are drinking less beer, and less alcohol in general, than at any point in the last half century. Moderation is now the norm for the great majority of Australians, who have a far more mature attitude to alcohol than decades ago,” he said.

“Professor Anderson’s report shows that compared with countries of similar per capita income (USD 54,180 in 2016, according to the World Bank’s Atlas Method) Australian beer drinkers are paying a greater amount of tax on the beer they enjoy.

“Beer tax (excise) in Australia represented 0.59% of federal tax revenue in 2017-18. In the EU, the average for beer excise as a proportion of tax revenue in countries at the same income level was just 0.37%.

“Last year Aussies coughed up over AUD 3.6 billion in beer taxes – excise and GST. That headline figure is huge, and the day-to-day tax burden worn by Australians enjoying a drink is over-the-top.

“Too often it is forgotten that 84% of the beer sold in Australia is made right here by Australians. Local beer production supports the full-time jobs of 103,000 Aussies and it generates over AUD 16.5 billion a year in economic activity.

“While we lament the decline, and in some cases death, of domestic manufacturing, it should be recognised that beer production has bucked that trend to see Australians making Australian beers for the Australian market.”

Written by Peter Needham