Australia: Tax Office lifts beer excise by 4%

Australian drinkers woke up to more than a hangover on August 1 as accelerating inflation and a quirk in the tax system sent the price of beer surging, Bloomberg reported.

In its semi-annual CPI indexation review, the Australian Tax Office lifted the excise on a frothy by 4%. It was the largest increase in over 30 years, according to the Brewers Association of Australia.

“Sadly, we’re now seeing the impact as pub patrons will soon be faced with the prospect of regularly paying around A$15 for a pint at their local,” said John Preston, CEO of the association. “Australians are taxed on beer more than almost any other nation.”

Australia adjusts the excise on beer under a formula linked to inflation, which in the most recent reading climbed at the fastest annual pace in 21 years.

The higher price is likely to add to growing cost-of-living pressures already hurting consumers in the historically beer-loving nation, where inflation is expected to peak at almost 8% by December. The result may encourage consumers to drink more wine, which operates under a different system of taxation.

Escalating consumer prices are likely to see the Reserve Bank of Australia push ahead with further interest rate increases after 125 basis points of hikes in three meetings since May. Economists predict another 50 basis-point rise at Tuesday’s policy meeting.

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