New Zealand: Second-largest alcohol excise tax increase to be a major blow for brewing industry

New Zealand’s Government has announced it will be introducing the second-largest alcohol excise tax increase in 30 years, 1News reported on May 30.

The tax will be increased by 6.65% after a record 6.92% increase last year.

For brewers, it’s another blow to an industry battling to keep up with inflation.

The Brewer’s Association of New Zealand’s Dylan Firth told Breakfast the increase is “pretty difficult” for people in his industry - given current inflation rates.

“It’s one of those things that we can kind of see coming with inflation,” he said.

“So we signalled pretty early with the Government that we can see it happen, and we would like to have a conversation about potentially trying to do something about it.”

He said that while the level of tax is within the Government’s discretion, the cost of business is rising - and it will become harder for brewers to make their products.

“It’s not just producing the product. It’s buying the goods.

“When they’ve got a discretionary option to raise tax if they could raise it by a smaller amount, we’ll look at it.”

Firth wants to see things like lower taxes for kegs at hospitality venues - which has been practised overseas.

“We’ve seen that in the UK, they’ve just done a 10% reduction after three years of excise tax.

“So there are governments around that world that do recognise the significance of these industries.”

He expects the increase will likely see around $30 million of extra costs going into the system - which could be passed on to Kiwis at the pub or the bottle shop.

“That might eventually have to be passed on because there is so much absorbed by business with the cost of doing everything.”

Much of what people pay for beer in New Zealand is made up of costs related to tax, Firth says.

“What that means is that when you next buy a 12-pack of beer, 50% of the price will be made up of tax through excise and GST.

“It’s going to become a lot less affordable for people around the country who just enjoy beer.”

However, alcohol harm reduction advocates see raising the rate as the right move.

“We do know that raising excise tax or reducing accessibility to alcohol is a very targeted and very cost-effective measure to minimise our correlated harm,” Alcohol Healthwatch’s Rebecca Williams told Breakfast.

She said the country is seeing “ongoing rates of harmful drinking, ongoing rates of harm burdened on our services, so it is important that we do take opportunities like this”.

Williams noted that the latest increase is a regular, based on inflation.

“It’s not something that the alcohol industry is surprised about.

“As far as we’re concerned, businesses job is doing business, and they can change and adapt to things that come through.

“I really don’t have a lot of sympathy for the alcohol industry saying they’re hard done by because there are a lot of people being hard done by at the moment, and I think we need to think about it in a broader view."

She said Alcohol Healthwatch would be seeking a higher rate than what's in place so that money can go towards harm reduction.

“Goes into our tax coffers, so the community benefits from that in a number of ways."

Alcohol harm reduction currently costs around $7.85 billion a year, Williams says, so the money goes towards emergency services and support networks that see the harm first-hand.

“It supports our hospitals, it supports our police and supports interventions for people experiencing harm from their alcohol use.

“Harm affects the drinker in a short-term impact, but it also affects those who are non-drinkers - so we do see a significant burden for those who are not drinkers.”

30 May, 2023