TAXES ON BEER

New Zealand Herald, Volume LXX, Issue 21561, 4 August 1933, Page 10

TAXES ON BEER

BREWERS SEEK DECREASE SMALL COMPETITIVE MARGIN DECLINE IN CONSUMPTION "There is barely sixpence a gallon difforenco between the New Zealand excise duty and tho duty on imported beer," said Mr. H. C. McCoy, manager of the Auckland branch of New Zealand Breweries, Limited, in giving evidence to. tho Tariff Commission yesterday regarding the relatively small margin on which local brewers had to work, considering that manufacturers in Britain and in other Dominions were able to produce at a much lower cost. Mr. McCoy said tho duty on British and other Empire beer was 2s a gallon, while the general tariff was 3s a gallon, plus surtax of 22£ per cent. The excise duty was Is 6d a gallon where the specific gravity did not exceed 1017, increased by 1-lGth for every unit above 1047. Thirty years ago tho import duty was 2s a gallon and tho excise rate was 3d a gallon. From 1915 onward tho exciso rate was increased in stages until it reached its present high rate, an increase of 500 per cent, whereas the imported beer was in the samo position as it was 30 years ago. "In the pre-war days," said Mr. McCoy, "wo had a preference of Is 9d a gallon. To-day there is barely sixpence a gallon preference, and that we consider to bo insufficient." Value to Supporting Industries The, value of tho brewing industry in supporting protected industries, such as glass-works and tho crown seal factory, was mentioned by Mr. McCoy. He also emphasised that the New Zealand brewers had to pay moro dearly for barley than Britain and the other Dominions. For instance, Australian brewers could purchase at about half tho New Zealand cost. Mr. McCoy said he did not know the reason for reducing tho tariff on British beer by Is a gallon last March, but ho assumed that waa done in accordance with the Ottawa agreement. Referring to excise duty, Mr. McCoy said the rate was increased from 5Jd to llsd a gallon in 1921, when heavy taxation was general. However, while land tax, income tax, totalisator tax and amusement tax were each reduced in subsequent years, no reduction waS made in the excise duty on beer, which was maintained at tho 1921 figure until 1930, when it was increased to Is, while in 1931 it was raised to Is 6d.

Comparing the years 1921 and 1929, Mr. McCoy said that, while the rate of duty had been increased in the period by 100 per cent, and the population had increased by 21.42 per cent, the consumption had dropped by 9.3 per cent, showing that the decline had occurred before present economic conditions asserted themselves. The consumption in 1929 was 13,010,990 gallons, which had progressively declined to 9,786,511 in 1932. Lighter Taxation Needed "At the present time the lightening of taxation is essential," said Mr. McCoy. "It is necessary both to help industry by the release of money for productive work, and to give people a little courage. The decline, in the consumption of beer, unless checked, will cause embarrassment to the Treasury in future years." The Chairman, Dr. G. Craig: What rates do you suggest on imported and on excise beers?

Witness: I think Australia should pay the same rate as we have to pay. 1 think we are entitled to 3s 3d, or at least 3s, a gallon. Dr. Craig: What about the United Kingdom ? Witness: While the exchange rate remains as at present we are all right. 1 should say 3s a gallon if the exchange comes off.

Professor B. E. Murphy: Why did not English beer undersell you before the exchange went up? Witness: We had a bigger protection then. Professor Murphy: In what wayP Witness: Lower excise. Answering further questions, Mr. McCoy said it was in lager beer that Australia was the principal competitor with the local product. Causes of the Decrease Professor Murphy: But lager beer is only a small proportion of the beer consumed. Witness: It is growing. It is becoming the modern drink. Professor Murphy: But it is not the beer usually sold over the bar counter? Witness: No; it is mainly a table beer.

Dr. Craig said he thought tho decrease in the consumption of beer was .principally due to three causes—the economic position, the increase in the excise duty and tho development of home-brewing. , "I should say a further snfall factor is the spread of motoring," said Professor Murphy. "Men do not want to be caught in a collision when they are. smelling of beer, although, I suppose, that factor would have a greater effect on the sale of spirits." The remainder of Mr. McCoy's examination was conducted privately.