Industry calls for beer tax relief ahead of excise hike

The Brewers Association, Brewers Guild of New Zealand and Hospitality New Zealand are calling on the Government to deliver beer tax relief through a cut in keg beer tax ahead of the upcoming excise tax increase.

The industry bodies are launching a campaign asking the Government to step in with sector-specific support that reduces keg tax by 50%. It comes as alcohol excise is set to increase to $1.3 billion for 2022, up from $1.22 billion in 2021. The groups say that beer alone faces an increase of $28.3 million. 

“The beer excise increase could not come at a worse time for brewers and consumers, with the effects of COVID-19 still holding sway on the economy, the cost of living squarely in focus for New Zealanders and the hospitality sector far from being back to normal,” said Brewers Association of New Zealand Executive Director Dylan Firth and Brewers Guild Executive Director Melanie Kees in a joint statement.

“One of the most important avenues for brewers is selling their product through bars and restaurants and the hospitality industry has suffered badly during the past two years and needs specific support. Yet here is the wider brewing and hospitality sector being hit with an extra $28.3 million tax.

“Under the projected increase the excise tax would now be $83.08 per keg, $0.55 per bottle and $0.71 per pint*. All before GST is added.”

Having first made the request in late 2021, the groups are renewing their call for the targeted support, which they say would provide a short, sharp cost-reduction on tap beer, supporting the hospitality sector and passing on to the consumer too.

“A keg-specific excise reduction such as this is targeted only to hospitality operators, as kegs are almost exclusively used by bars and restaurants,” says Firth. “This also provides targeted support for small breweries who generally have higher ratios of product sold through kegs, as well as often through their own taprooms.”

He says the Government has shown through the petrol excise tax reduction that it is open to using novel ideas to solve different cost of living problems. Firth says the keg excise reduction would be consistent with other peer markets such as Australia, which has a long-standing specific excise rates for keg beer and the UK, which has for the last two years frozen excise tax completely and created a new specific keg rate.

“As a sector, increasing costs brought on by tax make operating in this economic environment tough,” says Firth. “Large and small breweries are having to make difficult decisions about where to invest or where to pass on costs.”

*5% ABV for a 330ml bottle, 425ml pint, 50L keg