IBA vows to escalate fight for excise reforms in 2019

IBA vows to escalate fight for excise reforms in 2019

Independent Brewers Australia has taken aim at Australia's excise regime in its 2018 Annual Report, citing it as a "major growth constraint" for the industry.   

"Depending on whether you buy a schooner down at your local or pick up a six pack on the way home, up to 43% of the price of that beer will be tax," the report noted. "Australians pay among the highest excise rates in the world, more than New Zealand, the US, Canada, the UK and Europe. In Australia, beer excise is more than twice the OECD average and each year Australian brewers pay more than $2 billion in excise duty." 

The IBA said the requirement that independent brewers pay excise at the time of production, before revenue is generated from the sale of the beer, caused "significant cash flow difficulties" and disproportionately impacted smaller independent producers.

By contrast, winemakers pay the flat rate Wine Equalisation Tax at the point of BAS reporting, after sale revenue has been collected.

"In the year ahead, the IBA will continue to seek tax relief from the Federal Government and tax treatment for brewers comparable with that enjoyed by the Australian wine industry," IBA promised.  

It also called out the excise system as being "an outdated and unduly complex regulatory regime from a bygone era of beer as commodity".

"The amount of excise applied to beer changes depending on whether you choose one of the popular new mid-strength ‘session’ ales, or whether you’re enjoying a seven per cent ABV aged stout," it said. "In fact, beer has six excise rates which differ depending not only on the level of alcohol in the beer but also the type of package or container."

Despite all the pitfalls, the IBA said the industry had gone from strength to strength over the past year.

"Our growth has been nothing short of extraordinary, with a new Independent Brewer entering the market, on average, every six days," it said.

Federal budget wins

In the May 2018 Budget Prime Minister the Hon Scott Morrison MP announced the following changes:

■ Increasing the alcohol excise refund scheme cap from $30,000 to $100,000 a year for all brewers.

■ Extending the concessional draught beer excise rates to kegs of 8 litres.

These changes, which become effective on July 1, 2019, will result in an estimated 7% increase in sector production and a 3% increase in direct employment.

Growing market share

Beer is the category leader in liquor sales in Australia, worth $6.5 billion annually.

It's also a strong creator of value, when compared to other categories - while it makes up 37% of sales by volume, it constitutes 45% of sales by value. 
Market researchers divide the craft beer category into Gateway Craft, produced by the multinational beer companies, and Exploration Craft, produced by independent brewers.

"While Exploration Craft experienced 31% growth last year, Gateway Craft grew by just 4%," the IBA noted. "Put another way, Australian Independent Brewers delivered 73% of dollar growth from just 33% of sales."

The IBA also revealed it has an ambitious target of gaining 15% of Australia's beer market share by 2025.

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