Federal government looking to halve excise tax on draught beer

A push to halve the excise tax on draught beer is under ‘serious consideration’ for next month’s federal budget, with the cut to give drinkers 30c off a schooner.

Drinkers will get 30c off a schooner of beer as Prime Minister Scott Morrison seeks to resurrect his election fortunes at the same time as rescuing flailing pubs and clubs.

Senior government sources have told News Corp a push to halve excise tax on draught beer, which has been backed by up to a dozen government backbenchers, was under “serious consideration” for next month’s federal budget.

The push to cut beer taxes is being spearheaded by the Australian Hotel Association, Clubs Australia and the Brewers Association and follows a similar move in the UK late last year.

Maureen Sue (l to r), Matthew Trevitt,  and Amy Chang wholeheartedly support a beer tax cut. Picture: Sam Ruttyn

A source familiar with the discussions said any tax cut would be temporary, and designed to help pubs and clubs get back on their feet after more than two years of the pandemic.

In October last year the British government threw pandemic-battered pubs in the UK a lifeline with the biggest cut in draught beer taxes in 50 years.

In Australia, the Brewers Association estimates total draught beer sales have fallen by $2 billion since the start of the pandemic.

ATO data released last month showed the volume of draught beer sold over the bar had halved over the same period.

The Australian proposal, which would see the tax on a keg of beer drop from $70 to $35, would translate to a 40 cent cut in the price of a pint, while a schooner would be 30 cents cheaper and a pot 20 cents.

The cost to the federal budget of the proposal is around $153 million a year.

The vast majority of the $2.5 billion in beer taxes to be collected this year come from takeaway outlets which would be unaffected by the proposal.

Tasmanian MP Gavin Pearce backs the tax cut.

If it is accepted, the tax cut would end the current situation which has seen beer taxes rise twice a year for the past 35 years.

Tasmanian MP Gavin Pearce said he was in favour of cutting the excise because licenced premises in his area were struggling.

“I’m all about making it easier for the average man and woman on the street — pubs and clubs are doing it tough, and when I hear stories of publicans holding back price rises for up to 18 months that concerns me because eventually they’re going to have to catch up and that’s what’s going to hurt them,” he said.

“The reason I’m willing to support the reduction in excise is because those benefits end up benefiting the publican at the coalface where it is needed most.”

Julian Simmonds, MP for Brisbane seat of Ryan, said he was “enthusiastically” backing the push because “if we’re serious about rebuilding the economy and making families better off, then supporting the thousands of family-owned pubs and reducing the cost of a schooner should be a key part of the government’s budget response.”

Brewers Association CEO John Preston said “this proposal would have a tiny impact on the government’s alcohol excise revenue, which is around $7 billion a year, but it would have a big impact for beer drinkers, and struggling pubs and clubs.”

Matthew Trevitt loves a good frothy and thinks the initiative of bringing down the cost of draft beer is beneficial both for customers and businesses.

He said lowering the price of beer could make people feel more comfortable, knowing that the enjoyable things in life would still be affordable, especially for young people.

“Having cheaper beers brings something down and makes people feel somewhat comfortable about rising costs elsewhere,” Mr Trevitt said.

“It makes sense considering the costs are going up and the demand for hospitality staff is going up.”

Treasurer Josh Frydenberg is expected to include the tax cut in his upcoming budget. Picture: NCA NewsWire/David Crosling

Friend Maureen Sue echoed thoughts that small businesses would come out on top with the proposed changes, saying that it was a great idea, despite beer not being her drink of choice.

“I think it’s a good thing because it will get everyone to come out again after Covid and it incentivises something,” she said.

“It’ll bring more business to small pubs and hotels.”

Amy Chang agreed that reducing the cost of draught beer was a “good initiative to get people out and keeping the cost of social life relatively low”.

Friend Geena Valos suggested even making spirits, which tend to attract a higher cost, more affordable as well.

“Beer is very predictable to make cheaper, but perhaps they can also bring down the price of spirits, especially for young women who drink vodka lime sodas, gin and tonics, for example, that are already at a higher price,” she said.

Originally published as Federal government looking to halve excise tax on draught beer