IBA calls for indexation to excise remission scheme

In the face of the upcoming August excise increase, the Independent Brewers Association has called for the excise remission scheme for small brewers to be indexed.

Speaking before the Standing Committee on Economics, former IBA chair Richard Adamson told the hearing that the “bi-annual ratcheting up of excise tied to CPI threatens the existence of many independent brewers.”

“The excise remission scheme that provides independent brewers some economic relief must be indexed to these excise increases that we are seeing to give us a fighting chance.”

The excise tax on beer increases every six months in line with the Consumer Price Index and is set to rise on 1 August.  The current CPI indexation factor will see an excise increase of 2.2 per cent across the board.

This follows an increase on 1 February of 3.7 per cent.

Small brewers were given an increase in the excise remission to $350,000 in the 2021 Federal Budget, but the IBA says these benefits are quickly being eroded by the bi-annual excise indexation.

Adamson, who was speaking on behalf of the IBA as a board advisor, also called for a moratorium on the indexation increases so small brewers can catch up on excise payment accumulated during COVID.

“Many of our members are behind in paying the ATO due to COVID era deferments in excise payments,” he told the committee.

In response to a question from Committee Chair Dr Daniel Mulino MP about what was happening with small brewer’s margins, Adamson described the last twelve months as “challenging”.

“Certainly on the input side, costs have gone up dramatically,” he said.

“The price of malt, the price of hops, for many reasons, but just general inflation is one. Logistics costs have skyrocketed as well, so our margins have been squeezed.”

“And we’re also hit with the increase in excise, which is tied to CPI as a biannual increase.

“We do receive an excellent remission, but that remission is being eroded as that CPI increase comes through every six months.”

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