Brews and vines - The excise-ing climate of beer and wine
Brews and vines - The excise-ing climate of beer and wine
Freeze on beer excise indexation brings cheer!
The Government will pause indexation on draught beer excise and excise equivalent customs duty rates for a two-year period. Prior to the Government’s announcement, excise duty rates for alcohol were to be indexed biannually based on the upward movement of the CPI.
Starting from 1 August 2025, indexation due to occur in August 2025, February 2026, August 2026 and February 2027 will not occur.
Wine not?
The Government will increase the support available under the existing excise remission scheme for manufacturers of alcoholic beverages (the Remission Scheme) and Wine Equalisation Tax (WET) producer rebate (Producer Rebate). Approximately 1,500 brewers and distillers, and 3,000 wine producers currently access this scheme.
Currently, all eligible brewers and distillers can receive an excise remission under the remission scheme of up to a cap of $350,000. Similarly, all eligible wine producers can currently receive a WET rebate up to a cap of $350,000 under the Producer Rebate. This measure will increase the caps for all eligible brewers, distillers and wine producers to $400,000 per financial year, from 1 July 2026.
This measure is estimated to decrease receipts by $165 million over five years from 2024-25.
BDO comment
The measures will be welcomed by smaller brewers, distillers and wine makers as they will be able to deliver greater volumes of tax-free products to market. Headlines announcing a freeze on beer and wine taxes will no doubt also find favour with Australian drinkers. However, with forecast tax receipts to reduce by only $165 million over five years, a mere drop in the schooner of the more than $7 billion in alcohol tax collected each year, we question whether these concessions do enough to warrant the Government’s commentary that they support the tourism and hospitality industry.
We note that distillers (and consumers) have yet to receive any relief in continued excise duty CPI increases and the freeze for brewers of excise on draught beer is only a temporary measure. Therefore, the continued CPI increases continue to be a cost to both distillers and consumers who prefer distilled and ready-to-drink products.