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AUSTRALIA: Tax hike threatens Australia's beer market

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Australia's real-life Crocodile Dundees' may soon be going without their cold "tinnies" as the country's rural pubs and hotels are coming under threat from a substantial tax hike on beer.

A bitter battle between Australian brewers and the government is being fought very publically and is likely to escalate over the next two weeks before planned changes in tax become law.

The government is introducing a new value added tax system called GST which it predicts will push up beer prices by about 8% and raise an additional A$467m in revenue. The tax element of this increase was to be just 1.9% with the rest coming from increased service costs.

But the brewers, including Fosters and Lion Nathan, say this is misleading and warn that beer prices will go up by between 9%-10%, forcing many rural bars and hotels to close. The brewers say the service element will be just half a percent and they claim that the government is underhandedly increasing excise on beer by blaming service charges.

They are pumping substantial amounts of money into a public campaign to have the decision reversed with TV and newspaper advertising and in-pub leaflets. Drinkers even have a toll-free number they can call to register their displeasure. The campaign, called "It's Your Shout", highlights what the brewers say is a reversal of a pre-election promise to increase tax by 1.9%.

Rural Australia says that the tax hike will be passed onto consumers and it could crush demand forcing the country's traditional drinking holes to close.

Australian Associated Brewers is running the bad-tempered campaign ahead of the July 1st introduction of the GST tax. Foster's, Lion Nathan, J. Boag & Sons and Coopers are joining forces with the Australian Hotels Association and Clubs Australia in opposition.

"The brewers act merely as the government tax collectors. It is the beer drinkers who ultimately will have to pay for this tax grab, every time they buy a beer," said an AAB spokesman.

"The proposed beer price rises are a direct result of the government's plans to increase beer excise rates to a level which is unfair to Australia's beer drinkers. As industry leaders, we cannot stand-by and watch beer drinkers become an easy tax collection target for the Federal Government."

David Robertson, just-drinks.com, Asia-Pacific correspondent

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