New Zealand: Brewers asking for temporary cut in excise tax on keg beer

New Zealand’s brewers are asking for a temporary cut in excise tax on keg beer to help support struggling bars and restaurants, Stuff.co.nz reported on March 11.

The Brewers Association has asked that the Government immediately reduce the tax paid by half.

It’s the second time the association has asked for excise tax relief.

In May last year, the association campaigned unsuccessfully to get the Government to waive tax on about 50,000 litres of keg beer that were flushed away after they went stale while hospitality businesses were closing during the April national lockdown.

Dylan Firth, the association’s executive director, said: “We believe there is need for additional Government support that can be delivered in an extremely targeted way via an immediate 50 per cent reduction on excise tax for keg beer.”

Firth pointed to action taken in Britain to support hospitality businesses.

“We applaud the UK Government for their wide-ranging initiatives in the recently announced Budget, where for a second year have announced a freeze on all alcohol excise until 2021 and a significantly reduced VAT rate specifically for hospitality businesses of 5 per cent,” he said.

“We feel the impact of lockdowns and level changes here in New Zealand, specifically in the Auckland region, necessitate relief that would benefit a large part of the hospitality sector.”

Wage subsidies and Covid-19 support payments would not be enough on their own to save many hospitality businesses, Firth said.

Cutting excise on keg beer would only cut annual alcohol excise tax take by about 6 per cent, the association has calculated.

“The Government received $411 million in excise tax from the brewing sector in 2020 which will likely go up again in 2021 due to annual alcohol excise increases,” Firth said.

“The hospitality industry has suffered badly during the past 18 months and needs specific support. Industry figures believe the sector was down at least 20 to 25 per cent on average last year,” he said.

“The 2020 lockdowns and level changes to date have compounded this, with hospitality one of the industries deeply affected. For the majority of hospitality businesses, they can only sell alcoholic beverages on site, meaning they are unable to trade at all under alert level 3,” he said.

The lockdowns had driven beer sales to the supermarkets, with keg beer sales down, he said.

Kegs were used only by on-premise bars and restaurants. An excise tax reduction would also provide support for small breweries who generally sold most of their beer through kegs, as well as their own taprooms, Firth said.

Australia had set its excise tax on beer lower for keg beer, he said.

“Beer producers have worked hard to support the hospitality sector where they can with taking back kegs that cannot be sold after lockdown, investing in marketing campaigns and assets to assist bars and restaurants as well as other support.

“Now we are asking for the Government to step in with sector specific support,” he said.

10 March, 2021