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New taxes on alcohol

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THE excise and import duty system for alcohol is being reformed, moving from a flat to a stepped schedule based on the strength of alcohol. 

This reform will bring Solomon Islands closer to world best tax practice and ensure that the excise/import rate better reflects alcohol content of beverages.

Currently the rate of excise on domestically produced alcoholic drinks is $5.30 per litre. 

Ministry of Finance and Treasury said this is not appropriate, as high strength alcoholic drinks are subject to the same excise amount as lower alcohol drinks. 

“The Government is reforming the system to encourage respect and responsibility in alcohol consumption, recognising the social and health costs associated with excessive consumption of alcohol,” Ministry of Finance said.

As of 1 January 2013, the rate of excise payable on domestically produced alcoholic beverages will depend on the strength of alcohol (low, medium and high), at the following rates.

  • Low strength (up to 7.0%):  $5.60 per litre
  • Medium strength (more than 7.0% to 14.0%):  $7.05 per litre
  • High strength (more than 14.0%):  $43.20 per litre

Imported alcoholic beverages will be categorised in the same way (low, medium and high strength alcohol) with import duty rates 150% higher than the excise rates applying to domestically produced beverages.

Ministry of Finance said this change will ensure the rates of excise and import duty better reflect the social and health care costs associated with alcohol consumption. 

The new rates will also be fairer, as higher strength alcoholic products contain more alcohol, and should therefore be subject to higher excise.

The effect of the new regime is illustrated with the following examples.

  • 355mL beer, 4.7% strength (17mL ethanol)
  •  $5.60 excise per litre ($11.91 per 100mL of alcohol in the drink
  • $1.99 excise payable
  • 300mL premix, 8.0% (24mL ethanol)
  • $7.05 excise per litre ($8.81 per 100mL of alcohol in the drink)
  • $2.12 excise payable
  • 1 litre bottle of spirits, 40% (400mL ethanol)
  • 43.20 excise per litre ($10.80 per 100mL of alcohol in the drink)
  • $43.20 excise payable