Why beer in Australia is about to get even more expensive
The Australian Taxation Office’s attempt to define what exactly beer is could lead to consumers paying more for flavored drinks including seltzer, ginger beer and even lager, but craft brewers are fighting back.
The definition of alcohol makes a big difference to the price, as the excise duty on beer is much lower than on ‘other excise drinks’, including spirits and pre-mixed drinks.
As things stand, the excise tax rate on beer ranges between $2.22 and $36.98 per liter of alcohol, while other drinks are taxed between $58.48 and $66.67 per liter of alcohol.
But the ATO is considering changing the definition of beer, which would mean higher prices for some popular drinks if they were recategorized as not beer.
According to the ruling, alcoholic seltzers and drinks that were initially brewed as beer but subsequently modified – for example with fruit – would fall under ‘other excise taxable drinks’.
A draft ruling from the ATO stated that for a drink to be considered a beer, it must meet a ‘conventionally understood’ definition of a bitter taste and a medium to low alcohol content.
It was also said that the taste, smell and appearance come from the beer base through the fermentation of grains, usually barley.
But in a letter to the ATO, Independent Brewers Association chief executive Kylie Lethbridge said the move was “insulting” to an industry that regularly develops new beer styles and flavours.
The ATO’s attempt to define what exactly beer is could lead to consumers paying more for flavored drinks including seltzer, ginger beer and even lager. Stock image
In the letter, which was reported by the Sydney Morning HeraldMs Lethbridge said the change would mean that ‘on any given day a tax official would have the power to determine what product is beer – presumably without any qualification in brewing’.
She said a narrower definition could also have unintended consequences for some of Australia’s most popular lagers.
‘Lagers are formulated with very low bitterness and very low taste, using production techniques to ‘strip them of their flavour’… to the point that they too could push the boundaries of what could conventionally be understood as beer .’
Speaking on Perth radio station 6PR on Monday, Ms Lethbridge said the ATO’s planned changes “could be the final nail in the coffin for our small independent craft brewers in Australia.”
“We feel like we’re in the line of fire, this is going to have a significant impact on a number of brewed products that are beer, even beyond seltzer,” she said.
“Aussies who want to go out, meet people… go to the local pub, have a few beers, it’s becoming almost unaffordable.
“Especially when the cost of living comes on top of that.”
The tax authorities are considering changing the definition of beer, which would mean higher prices for some popular drinks if they were recategorized as not beer. Stock image
