Anthony Albanese draught beer tax freeze: What it means for your pint

Prime Minister Anthony Albanese has promised to freeze beer taxes for two years in a pre-election pledge. Here’s what it means for the price of your pint.

Prime Minister Anthony Albanese has promised to freeze beer taxes for two years in a pre-election pledge. Here’s what it means for the price of your pint.

What’s the draught beer excise?

Excise is a tax levied on alcohol and tobacco produced in Australia, as well as on fuel and petroleum products. The beer and spirit excise is raised twice annually in February and August based on inflation.

Similarly to taxes on cigarettes, beer excise is designed to discourage excessive drinking and account for the cost of alcohol to the taxpayer in healthcare and lost productivity.

The Prime Minister announced a pause to indexation on the draught beer excise, which applies to beer on tap at hospitality venues.

The freeze on excise indexation will only apply to beer on tap. Picture: Kevin Farmer

Beers in cans or bottles, and any other type of alcoholic beverage on tap or otherwise, will not have their taxes frozen. The policy will have no impact on drinks from a bottle shop.

Currently brewers and distillers get a full remission of any alcohol excise paid up to $350,000 each year, a cap which Mr Albanese has pledged to increase a further $50,000.

What will freezing it do?

The alcohol excise was increased on February 3 by 0.4 per cent. For full-strength draught beer from a keg, this translates to a rise of 17 cents to $43.39 per litre of alcohol content.

For a keg of Victoria Bitter with an alcohol content of 4.9 per cent, for example, this comes out to about 90 cents taxed per pint. The latest indexation increased this excise by less than one cent per pint.

The latest indexation of draught beer excise resulted in an increase of less than one cent per pint.

Asked whether this policy would translate to a freeze in the prices of beer on tap, Mr Albanese would only say that if the price goes up for consumers “then no one can blame the Government, because we’re freezing that cost for two years”.

“This is good for small businesses, good for cost of living, and it’s good for employment as well. We want people to get out and about,” the Prime Minister said.

What’s been the reaction?

Industry bodies and beer-enthusiasts have had mixed reactions to the move. Spirits and Cocktails Australia chief executive Greg Holland said there was no rationale to support a freeze on draught beer alone.

“The tax on spirits is already three times higher than it is on beer,” he said.

“Freezing draught beer excise alone is discriminatory in every sense — it favours beer drinkers over spirit drinkers, brewers over distillers, and pubs over bars.”

Even cricket great David Warner questioned the move, commenting on Mr Albanese’s Instagram that the policy is coming “[a] few years too late”.

The Prime Minister spruiked the policy as a “common sense” cost of living measure. Picture: NewsWire/ Tim Pascoe

Australian Hotels Association CEO Stephen Ferguson however said the move was “a win for commonsense in the middle of a cost-of-living crisis – every little bit makes a difference.”

“It’s great to see the Albanese Government has listened and acted on this unpopular hidden tax,” he said.

Before the February increase to the excise, Mr Ferguson described the tax on beer and spirits as “a dripping tap which delivers $6.2 billion of drinkers’ money to Canberra already.”

What has the Coalition said?

Within hours of announcing the freeze, shadow treasurer Angus Taylor said the Coalition would match the policy and blamed Labor for the state of affairs.

“The cost of everything has gone up, and small businesses are paying the price,” Mr Taylor said.

“Even a simple beer at the pub keeps getting more expensive because Labor has let inflation spiral out of control.”

As indexation has already been applied to the draught beer excise for February, the freeze will first come into effect in August.

Originally published as Anthony Albanese draught beer tax freeze: What it means for your pint