The Australian Taxation Office’s attempt to define what exactly beer is could lead to consumers paying more for flavored drinks such as seltzer, ginger beer and even some beer, but craft brewers are fighting back.
How alcohol is defined makes a huge difference in price, as the excise tax on beer is much lower than that on “other excisable beverages”, including spirits and pre-mixed drinks.
As things stand, the excise tax rate on beer ranges from $2.22 to $36.98 per liter of alcohol, while the tax on other beverages ranges from $58.48 to $66.67 per liter of alcohol. .
But the ATO is considering changing the definition of beer, which would mean higher prices on some popular drinks if they were reclassified as non-beer.
Seltzers and spirits brewed initially as beer but later modified (for example, with fruit) would be included in “other excisable beverages,” according to the ruling.
A draft ruling from the ATO said that for a drink to be considered beer, it had to meet a “conventionally understood” definition of having a bitter taste and a medium to low level of alcohol content.
He also said that its taste, smell and appearance come from its 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 some beer. 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 officer would have the power to determine what product is beer, presumably without any brewing qualifications”.
He said a stricter definition could also have unintended consequences for some of Australia’s most popular lagers.
“Lagers are formulated with very low bitterness, very low flavor, and use production techniques to ‘strip them of their flavor’… to the point that they could also be understood as pushing 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 a little bit like we’re in the line of fire, this is going to have a significant impact for a number of brewed products that are beer, even outside of seltzer,” he said.
‘Australians who want to go out, want to meet people… want to go out to the local pub, have a couple of beers, it’s just becoming almost unaffordable.
“Particularly when you add to that the cost of living crisis.”
The tax office is considering changing the definition of beer, which would mean higher prices on some popular drinks if they were recategorized as non-beer. stock image