Another tax hike, another sting

Since taking over the Grand Central Hotel on Cobram’s Punt Rd, the co-owners of the Cobram institution have seen the impact of indexation on the Federal Government’s beer excise first-hand.

They’ve had to put up their beer prices to remain sustainable, but only do it once a year.

The six owners of the hotel do what they can to absorb the rise, not wishing to pass too much of the indexation on to their patrons.

But at the end of the day, they said they had little choice if they wanted to remain sustainable.

“We’re still going to have to put it up. We’ve got no choice,” Mrs Virgona said.

“We just have to absorb it. That’s all we’re able to do, and lose that little bit of profit margin.”

But the impact of the beer excise is overshadowed by other costs of running the hotel.

That includes its overhead costs, such as electricity and gas.

“We’ve just got to build other things around the place to make that profit, rather than focus on the alcohol and the beer,” Mrs Virgona said.

The beer excise duty, based on the Consumer Price Index, is indexed twice a year, in February and August.

Its aim is to encourage people to turn to drinks with a lower alcohol content.

The excise rate for beer applies to beverages with an alcohol content above 1.15 per cent.

For bottled beers with an alcohol content of more than 3.5 per cent, the excise rate has gone up from 61.32 to 61.57 in February.

For beer exceeding 3.5 per cent alcohol content in an 8- to 48-litre container — such as a keg — and designed to connect to a tap, the rate increased from 43.22 to 43.39.

But while pubs such as the Grand Central Hotel may be able to absorb indexation on the excise, it’s a different story for the owners of Byramine Homestead & Brewery, Wade and Nicole McPherson.

The small-scale brewery crafts up to seven beers, three ciders and one variety of ginger beer.

As a small-scale producer and seller, the homestead has no choice but to absorb the cost of the excise each time it is indexed.

“Every time it goes up, it hurts,” Mr McPherson said.

“It just makes it tougher and tougher. Every time it goes up, your profit margin becomes less and less.”

Up against major brewers such as Carlton & United Breweries and Lion, the homestead faces the prospect of being taken out of the market if the excise continues to go up.

It comes following an announcement by the government that it would freeze indexation on the excise for two years if Labor was elected at this year’s federal election.

Importantly, the freeze won’t come into force until the next indexation date in August this year.

But Mr McPherson welcomed the election promise as good news for small businesses like his.

“Anything trying to freeze the cost for it is good,” he said.