The Brewers Guild and Brewers Association are together lobbying government to offer some excise tax relief for the industry after the latest Statistics New Zealand inflation figures created the scenario for a jump in beer prices later this year.
That’s because excise tax is tied to the Consumer Price Index (CPI) and with the 6.9 per cent increase announced this week, that means excise tax will jump by a similar margin. It’s a massive change after years of low inflation.
The Guild represents dozens of small and independent breweries as well as big players such as Lion and DB, while the Brewers Association is a lobbying group representing just the big two breweries Lion and DB. In a joint press release, the two organisations, headed by Melanie Kees and Dylan Firth respectively, said the excise hike scheduled for July 1 would hit hard.
“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 economy, the cost of living squarely in focus for New Zealanders and the hospitality sector far from being back to normal,” Kees and Firth said in the statement.
Brewers Guild Member and Good George co-founder Brian Watson added: “we currently pay over $3.0 million in excise already, a 6.9% increase is the same as hiring 2-3 new staff members, a $204k increase on last year.”
The Guild and BA said at a time when many New Zealanders are facing an economic crunch, the increase to beer tax “is a hard one to swallow”.
“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 2 years and needs specific support. Yet here is the wider brewing and hospitality sector being hit with an extra $28.3 million tax.”
Based on a 5 per cent beer, the projected excise tax element in each would be $0.55 for a 330ml bottle and $0.71 for a standard pub glass of 425ml.*
“In late 2021 our organisations jointly asked for additional Government support that could be delivered in an extremely targeted way via an immediate 50 per cent reduction on excise tax for keg beer. This would have provided a short sharp cost reduction on tap beer supporting the hospitality sector and when passed on for the consumer too.
“Again, we reaffirm our call for this action to be considered.
“A keg specific excise reduction such as this is targeted only to hospitality operators, as kegs are almost exclusively used by bars and restaurants. 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. What we are looking to target 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 2 years frozen excise tax completely and created a new specific keg rate.”
They said the Government has shown with petrol tax reduction, that is willing to use novel ideas to solve different cost of living problems and asked the same for a sector that employs over 160,000 New Zealanders.
“The Brewers Association and Brewers Guild of New Zealand along with Hospitality New Zealand are calling on the Government to deliver beer tax relief to pubs, clubs and beer drinkers and other venues through a cut in keg beer tax. This will see a campaign launched next week asking for the Government to step in with sector specific support around reducing keg tax.”
(* this story has been corrected: an earlier version said excise tax would increase by $0.55 and $0.71)