Federal government discusses dropping the taxes on beer prices

There is a push among some in the federal government to bring down the price of beer by halving excise tax, as we get closer to an election.

Beer drinkers will get 30c off pints and 20c off schooners as Prime Minister Scott Morrison seeks to resurrect his election fortunes and at the same time rescue flailing pubs and clubs.

Sources told The Advertiser a push to halve excise tax on draught beer, which had the backing of up to a dozen government backbenchers, was under consideration for next month’s federal budget.

A cut in beer tax is being pushed by the Australian Hotels Association, Clubs Australia and the Brewers Association and follows a similar move in Britain last year.

A source 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 Covid-19 pandemic.

The government is set to reduce the price of draught beer. Drinkers at the Commodore Hotel (L-R) Maureen Sue, Matthew Trevitt, Geena Values and Amy Chang. Picture: Sam Ruttyn

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

The Brewers Association estimates draught beer sales in Australia have fallen by $2bn since the pandemic began.

Australian Taxation Office data last month showed the volume of draught beer sold over the bar had halved in the same period.

The Australian proposal, to cut the tax on kegs from $70 to $35, translates to a 40c cut in the price of imperial pints, while pints would be 30c cheaper and schooners down 20c. The cost to the federal budget of the proposal is about $153m a year.

Prime Minister Scott Morrison will seek to reduce the price of beer. Picture: AFP

Most of the $2.5bn in beer taxes to be collected this year come from takeaway outlets that would be unaffected. A tax cut would end the long-time custom under which beer taxes have risen twice a year for the past 35 years.

Julian Simmonds, MP for the Brisbane seat of Ryan, said he “enthusiastically” backed 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”.

Brewers Association chief executive John Preston said the proposal would have a tiny effect on the government’s ­alcohol excise revenue but “a big impact for beer drinkers and struggling pubs and clubs”.