Excise tax might be the hot-button issue in Australian beer at the moment. It’s quickly mentioned whenever troubles with the industry (such as brewery closures) are discussed, and has become an election issue with parties in and out of government making various promises of reform or relief. Sadly, the ‘debate’ is undermined by half-truths and misinformation. I want to push back against that, focusing on a particular widely-shared clip by Queensland’s Blackflag Brewing.

Now, I need to be clear that I am not here to defend the current system. I think it’s profoundly broken, overcomplicated, and unfair.¹ But widely-believed falsehoods are cluttering up the path to actually fixing it. I’d been trying to find the best way to point out what was wrong, and struggling to keep up with various bits of nonsense as they appeared in the media and online, when Blackflag’s video — posted to their social media accounts in February, and worth a (re)watch now² — concisely collected and supercharged the worst of them.

The blame isn’t theirs alone; these talking points existed before they posted and have been pushed by other breweries and promoted by the Independent Brewers Association. But it’s a perfect encapsulation and they helped them ‘go viral’ and reach the wider public in way that nothing else did, and a fact-check is long overdue. So, taking them in the order they appear:

“…our beer tax is rated as the third highest in the world. That’s pretty high.” This is a bad sign that we’re in for extreme levels of oversimplification. A moment’s extra thought shows that something’s relative ranking tells you basically nothing about its actual nature, in context. The third tallest kid in kindergarten is probably still pretty short, all things considered. And excise isn’t the only tax in play, obviously, so you have to think about the balance of all the others. In New Zealand — where this issue is also pretty salient but not quite so rabid, as best I can tell — the excise rate is generally lower but the sales tax is higher.³ Trying to find a brewery’s break-even point between just those two scenarios would be a nightmare.

If you want a wider view, a recent study⁴ compared the beer industry’s contribution to the economy (in terms of GDP, jobs, and tax) in 76 different countries — and Australia was firmly in the middle on all three counts.⁵ I don’t think any correlation emerges from the data between the health or importance of beer as a business or a subculture and its relative tax burden.

“…every year, in fact twice a year, we’ve been told we’ve got to put more and more tax into every beer we brew…” This bit of misinformation calls for a different economics lesson: the real, effective value of money changes over time. But everyone already knows this. Even if it’s disorienting to see an old pricelist with $2 beers — like this 1987 sign I found in the Smithsonian — you’re aware that wages and everything else were different back then and working out a fair comparison is complicated.

Because excise on beer is calculated as a dollar amount per litre of alcohol in the finished product, that number needs to be indexed for inflation — just like everything else. If inflation is 4% and your boss offers you a 2% raise, you know that’s a bad deal and that if you get no adjustment, it’s effectively a pay cut despite the literal numbers in your salary staying the same. The “increase” in excise that you hear about every six months is, in a very real sense, no increase at all.

Twenty years ago, in February 2005, the excise on full-strength tap beer was $25.32, which is $42.32 in inflation-adjusted dollars — almost exactly what that rate is now.⁶

This is also why a side-point from the video — that the beer excise is “so different to the tax in wine, that hasn’t changed in years” — is misleading. In Australia, wine is exempt from excise but subject to a separate “equalisation tax” of 29% — so while it’s true that rate hasn’t changed, it’s completely beside the point. As inflation has increased the price of wine, so the tax paid has “gone up” as a dollar amount. And besides, small brewers should not hope for a similar system to replace beer excise; a value-add tax would put craft / indie producers — with their generally higher and wider-ranging prices — at further disadvantage against larger companies.

“…it’s getting to the point where almost half of this schooner is tax.” Let’s do the math. Blackflag’s hero beer is Rage, a 6% ABV hazy pale; a schooner is 425ml which gives us 0.0206 excisable litres of alcohol because the first 1.15% is exempt; at the relevant rate of $43.39 that’s… eighty-nine cents. And to be clear, they will not sell you a schooner for $2.⁷ (It’s not 1987 anymore.)

So what’s going on? I surveyed several trade pricelists,⁸ worked out each product’s excise component, and the higher range of what I found was more like 30% — oddly similar, after all that, to the wine tax. The only way to get anywhere near “half” is to 1) focus on the wholesale price of the keg the schooner came from, and 2) blur the issue and bundle in other applicable taxes.

The bait-and-switch is so obvious if you take the time to look closer, but it worked, leaving the public with a hugely-distorted sense of things. The actual price of a pint in a pub includes rent, utilities, stock, wages, and hopefully some profit for the venue — but as folks see it rise for a raft of different reasons, excise is getting an outsized share of the blame. Tax is easy to scapegoat.

One other shocking widely-shared error is worth singling out here, too. The first sentence in a popular article about the most-recent indexation overstated the price rise by a factor of about twenty five — rather than going up “by” a dollar, the excise component on a standard schooner would rise a few cents, maybe landing at a dollar.

But so many people in the industry happily boosted this story and others like it, plus the Blackflag video, similar posts by other breweries, and the Independent Brewers Association’s campaign — which heavily leans on the “increases every six months” trope. The reporter was probably just being hasty, preoccupied with landing a punch. Anyone who works in beer should’ve immediately clocked the mistake and thought twice about sharing the article, or taken two seconds to contextualise it if they believed it otherwise contained valuable insights. Likewise, if you’re drafting a social media post or hopefully-viral video and you work with these numbers every day, the issues I’ve pointed out here should be obvious to you.

The problem is that these errors are so basic that it’s hard to remain generous and believe that they’re misunderstandings rather than deliberate misinformation. The fact that Blackflag chose to wrap up their pitch with “make beer great again” is (ironically) a huge red flag that some dodgy politics are in the mix, together with way too much willingness to play fast and loose with the truth to get what they want.

Some reform is justified, maybe needed. But we can’t have a productive discussion about it when so many people are operating — intentionally or not — so far removed from reality. This isn’t a debate, it’s a debacle.

I wrote this piece together with one on direct government “support” for the beer industry generally. Check that out if your reaction is “but the government needs to do something” — please don’t make a voting decision based on what a party or candidate will “do for beer”…

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1. If you need me to lay out positive suggestions before I get started criticising other people, I can: 1) the eleven different classes cause pointless complexity, especially since stronger beers will attract more excise already. This should be simplified down to a single rate, removing the current distinction between packaged and kegged beer. 2) all alcohol should be taxed on the same basis. Ethanol is ethanol, and the wholly different system for wine is particularly galling. (But it should be brought in line with beer, not the other way around.)
2. There’s a full transcript here, if that’s useful.
3. The main (non-low-alc.) rate in NZ is $36.905 (per litre of alcohol in the finished product) which is roughly in the middle of Australia’s complicated system of different rates which range from $10.57 to $61.57; full strength tap beer is $43.39. NZ’s GST is 15% with very few exceptions, in Australia it’s 10%, but again with various extra factors and exemption to consider.
4. With thanks to Michael Donaldson, who drew attention to it in his Friday Night Beers newsletter. The report was commissioned by the World Brewing Alliance lobby-group, so engage appropriate skepticism, but I’m not sure that undermines the relative-ranking point here.
5. I’ve transcribed the table from Annex 1 (p50-51) into a more-usable spreadsheet, if you’re keen to play around with the data.
6. The Reserve Bank’s calculator only goes up to the last full year, and the August 2024 rate was $43.22; the current figure is $43.39.
7. The excise component does go up with ABV, but even if we picked their strongest beer — Thor’s Hammer Quad IPA, 18.3% — you’d get to $3.16 in excise. And again, you cannot buy a schooner of a beer like that for $7.
8. I used to be the beer-buyer for a bar and it turns out many breweries don’t purge their mailing lists.