{"id":26461,"date":"2025-05-01T09:36:35","date_gmt":"2025-04-30T21:36:35","guid":{"rendered":"https:\/\/philcook.net\/beerdiary\/?p=26461"},"modified":"2025-05-25T16:04:19","modified_gmt":"2025-05-25T04:04:19","slug":"excise-exercise","status":"publish","type":"post","link":"https:\/\/philcook.net\/beerdiary\/2025\/05\/01\/excise-exercise\/","title":{"rendered":"An excise tax fact-check exercise"},"content":{"rendered":"
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Disclaimer-disclaimer: I do not approve of their message<\/figcaption><\/figure>\n

Excise tax might be the<\/em> 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.<\/p>\n

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https:\/\/philcook.net\/beerdiary\/wp-content\/uploads\/Blackflag-resize-15.mp4<\/a><\/video><\/div>\n<\/div>\n

Now, I need to be clear that I am not here to defend the current system<\/em>. I think it’s profoundly broken, overcomplicated, and unfair.<\/span>1<\/sup><\/a><\/span> 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 \u2014 posted to their social media accounts in February, and worth a (re)watch now<\/span>2<\/sup><\/a><\/span> \u2014 concisely collected and supercharged the worst of them.<\/p>\n

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<\/a>, and a fact-check is long overdue. So, taking them in the order they appear:<\/p>\n

“…our beer tax is rated as the third highest in the world. That\u2019s pretty high.”<\/strong> 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<\/em> 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 \u2014 where this issue is also pretty salient but not quite so rabid, as best I can tell \u2014 the excise rate is generally lower but the sales tax is higher.<\/span>3<\/sup><\/a><\/span> Trying to find a brewery’s break-even point between just those two scenarios would be a nightmare.<\/p>\n

If you want a wider view, a recent study<\/a><\/span>4<\/sup><\/a><\/span> compared the beer industry’s contribution to the economy (in terms of GDP, jobs, and tax) in 76 different countries \u2014 and Australia was firmly in the middle on all three counts.<\/span>5<\/sup><\/a><\/span> I don’t think\u00a0any<\/em> correlation emerges from the data between the health or importance of beer as a business or a subculture and its relative tax burden.<\/p>\n

\"Part<\/a>
A literal museum piece \u2014 although, adjusted for inflation<\/a>, that Sierra Nevada is ~$8 US, which I think I could easily find today<\/figcaption><\/figure>\n

“…every year, in fact twice<\/i> a year, we\u2019ve been told we\u2019ve got to put more and more tax into every beer we brew…”<\/strong> This<\/em> 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 \u2014 like this 1987 sign I found in the Smithsonian \u2014 you’re aware that wages and everything else were different back then and working out a fair comparison is complicated.<\/p>\n

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 \u2014 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<\/em> 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<\/em>, no increase at all.<\/p>\n

Twenty years ago, in February 2005, the excise<\/a> on full-strength tap beer was $25.32, which is $42.32 in inflation-adjusted dollars<\/a> \u2014 almost exactly what that rate is now.<\/span>6<\/sup><\/a><\/span><\/p>\n

This is also why a side-point from the video \u2014 that the beer excise is “so different to the tax in wine, that hasn\u2019t changed in years”<\/strong> \u2014 is misleading. In Australia, wine is exempt from excise but subject to a separate “equalisation tax” of 29%<\/a> \u2014 so while it’s true that rate<\/em> 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<\/em> hope for a similar system to replace beer excise; a value-add tax would put craft \/ indie producers \u2014 with their generally higher and wider-ranging prices \u2014 at further disadvantage against larger companies.<\/p>\n

“…it\u2019s getting to the point where almost half of this schooner is tax.”<\/strong> Let’s do the math<\/a>. 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<\/em>. And to be clear, they will not sell you a schooner for $2.<\/span>7<\/sup><\/a><\/span> (It’s not 1987 anymore.)<\/p>\n

So what’s going on? I surveyed several trade pricelists,<\/span>8<\/sup><\/a><\/span> worked out each product’s excise component, and the higher range of what I found was more like 30% \u2014 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.<\/p>\n

The bait-and-switch is so obvious if you take the time to look closer, but it worked<\/em>, 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 \u2014 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.<\/p>\n

One other shocking widely-shared error is worth singling out here, too. The first sentence in a popular article about the most-recent indexation<\/a> overstated the price rise by a factor of about twenty five<\/em> \u2014 rather than going up “by” a dollar, the excise component on a standard schooner would rise a few cents, maybe landing at<\/em> a dollar.<\/p>\n

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“Brutal… crushing… staggering…” Put down the thesaurus and grab a calculator, Shannon<\/figcaption><\/figure>\n

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<\/a> \u2014 which heavily<\/em> 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.<\/p>\n

The problem is that these errors are so<\/em> basic that it’s hard to remain generous and believe that they’re misunderstandings rather than deliberate misinformation.\u00a0The fact that Blackflag chose to wrap up their pitch with “make beer great again”<\/strong> 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.<\/p>\n

Some<\/em> reform is justified, maybe needed. But we can’t have a productive discussion about it when so many people are operating \u2014 intentionally or not \u2014 so far removed from reality. This isn’t a debate, it’s a debacle.<\/p>\n