The Government has kept its commitment on beer as was stated in the Government’s

policy, A New Tax System.

Page 87 of that policy stated:

“…the change in excise will be limited so that the retail price of a carton

of full strength beer need only increase by the estimated general price increase

associated with indirect tax reform.” (ie 1.9%).

It is not possible to have a standard excise regime which produces a 1.9% price rise in

a carton of beer and the same on a draught beer across the bar.

Senator Lees notes that the Government has kept to its promise on wine which was that:

“The Wine Equalisation Tax will be levied at such a rate that the price of a four

litre cask of wine need only increase by the estimated general price increase associated

with indirect tax reform; ie 1.9%.” (ANTS, p87)

Again this is the effect on the low value product even though it moves the cost of a

bottle of premium wine by more than 1.9%.

The Democrats fully support the application of the GST to services. There is no

consistency in applying the GST to the service of food in a restaurant, which the

Democrats support, but not applying it to the service of alcohol in the same restaurant,

or in a pub or club. Since a draught beer has a service component, a standard excise and

GST means that its price moves more than a packaged product.

Whilst today’s press release might be seen as good populist politics, it is not

properly thought through and is unachievable under a standard excise and GST regime.

If the Democrats were really interested in holding the Government to its election

commitments they would have passed the Government’s tax policy in full, a long time

ago.

27 April 2000

Media Contact: Niki Savva 02 6277 7340