Labor to knock less than a cent off a mid-strength pint by freezing draught beer tax

Labor will knock less than a cent off the cost of a mid-strength pint by pausing the biannual indexation of the draught beer excise for two years.

Touted as a “win for beer drinkers, brewers and hospitality businesses”, the freeze will come into force from August, when the next hike was previously scheduled.

The duty rates for beer are normally adjusted twice a year using a calculation based on the most recent inflation figures.

But any savings from the freeze will be modest for brewers and beer drinkers alike. On a 48-litre keg of mid-strength beer, it would only amount to roughly 18 cents.

That equates to less than a cent a pint, which can cost anywhere from $10 to $18, depending on the venue.

Those calculations assume the inflation rate remains the same, which would mean the excise on that keg would have grown from the current rate of $11.63 to roughly $11.81 by the end of the two years.

Meanwhile, the pause is expected to cost the budget $95 million over four years.

Prime Minister Anthony Albanese described the move as a “common sense measure” that is “good for beer drinkers, good for brewers and good for pubs”, while Treasurer Jim Chalmers said it was a “modest change”.

“My government is building Australia’s future and to do that we need to support our small and medium local businesses to thrive,” Mr Albanese said.

The government said it will consult with the sector over the implementation of the freeze.

Labor last week announced it would increase the excise remission cap from $350,000 to $400,000 for brewers and distillers from July next year. Winemakers will also be able to claim back a rebate of up to $400,000.

The tax incentive allows alcohol producers to get a refund on any tax paid up until that cap.

‘A great first step,’ industry says

Brewers and bars have long called for the excise to be frozen or slashed, with Australia’s alcohol tax among the steepest in the world.

Stephen Ferguson, the national chief executive of the Australian Hotels Association, said the excise had been going up without review for four decades.

“We’re concerned about a drop in the number of people being able to go to the pub and enjoy a beer, have a meal and be entertained,” he said.

Mr Ferguson said the tax freeze would help hotels maintain staff during a cost of living crisis that has meant more Australians are staying home to save money.

“This freeze will be quite minor in terms of cost, but also what the government said is they are willing to consult over the next period on how the excise works,” he said.

“We recognise the need for the government to raise revenue from liquor excise, but we also need to make sure that the current settings are not discouraging socialising in safe licensed venues.”

The alcohol exercise applies to the volume of a drink’s alcoholic content above 1.15 per cent rather than its total volume.

It was last increased at the start of February, prompting the Brewers Association of Australia to call for it to be slashed.

“We already have one of the highest beer tax rates in the world — there is no need for it to keep going up twice a year,” chief executive John Preston said.

The freeze won’t come into force until after this year’s federal election, which is due on or before May 17.

In September last year, Shadow Treasurer Angus Taylor hosed down suggestions that the Coalition would move to freeze the beer excise after Nationals leader David Littleproud pledged to consider reforming it at the next election.

Mr Littleproud pushed back in response, declaring that the Liberals “don’t get to determine all policy”.

A parliamentary inquiry into food and beverage manufacturing last month recommended that a new committee be formed to report on Australia’s alcohol industry.