Nationals leader wrong to say more than 50% of beer price is tax

What was claimed

More than 50% of the cost of a pot of beer is tax.

Our verdict

False. It’s around 15%.

Nationals leader David Littleproud claims that more than 50% of the cost of a pot of beer is federal tax. This is false. Excise duties and GST together account for only around $1, about 15%, of a $7 pot of full-strength beer bought in a pub. 

However, around 40% of the cost of a can or bottle of full-strength beer is tax. 

The politician made the claim on September 23 during a 3AW radio interview in which he argued for “a pausing of excise on alcohol served at our local pubs”. When asked how much of a pot of beer “is now federal tax”, Littleproud said: “Yeah, look, it’s over 50% because there’s a compounding effect that’s gone in every six months”.

Littleproud’s office didn’t respond when AAP FactCheck asked for the basis of the 50% figure.

Excise tax varies depending on the alcoholic strength of the beer, the volume produced and the type of container in which it’s sold. These rates rise twice a year, indexed against consumer inflation. The Australian Taxation Office (ATO) publishes a full list of beer excise rates.

For example, beer with an alcohol content of more than 3.5%, that’s sold in a keg over 48 litres, is taxed at a rate of $43.22 per litre of pure alcohol at the time of writing. For a keg of beer with less than 3% alcohol, the tariff is $10.53/L of alcohol. For a keg of 3-3.5% alcohol beer, the rate is $32.98/L of alcohol.

However, the first 1.15% of alcohol in beer is exempt from excise tax. 

AAP FactCheck calculates a 50-litre keg of 4.6% beer — such as Tooheys New or Carlton Draught — would be subject to $74.55 in excise tax or $1.49/L of beer. That translates to 42c of excise tax per pot, which is 285ml. This measure is also known as a middy in NSW and Western Australia, and as a schooner in South Australia.

Beer is also subject to 10% GST, meaning a $7 pot includes 64c of GST. The combined tax liability of a $7 pot of 4.6% alcohol beer would, therefore, be $1.06 or 15% of the sale price. The same formula results in 63c of excise tax in a 425ml schooner of full-strength beer, and 85c of excise tax in a pint.

The cost of higher-alcohol beer includes a higher proportion of tax, but it’s still not near 50% of the sales price. For example, a $7 pot of 8% alcohol beer would include $1.48 in taxes, around 21% of the bar price.

Cans and bottles of beer are taxed at a higher rate than tap beer, regardless of whether they are sold in a pub or a bottle shop. Full-strength bottles and cans are subject to a tax of $61.32/L of alcohol.

A 375ml bottle of 4.6% alcohol beer sold in a pub for $8 would be subject to $1.52 in excise duty and GST, or 19% of the sales price.

For a slab of 24 bottles of the same beer sold in a bottle shop for $60, about $24.45 or 40% of that price would be taxes.

Figures supplied by industry bodies broadly match AAP FactCheck’s calculations. 

Brewers Association of Australia chief executive John Preston told AAP FactCheck that taxes account for around 60c of the cost of a full-strength pot, 70c of the cost of a schooner and 90c of the cost of a pint.

The Australian Distillers Association (ADA), which represents craft spirit distillers, said beer was taxed at 42c per standard drink. The tax on spirits was more than double that of beer, and that more than half the price of a $70 bottle of gin was tax, the ADA added.

The verdict

False. The claim is inaccurate.