Fri Feb 28

Albanese’s pitch on beer – temporary freeze on excise indexation

Written by Michelle Grattan, Professorial Fellow, University of Canberra

The Albanese government will temporarily freeze the indexation on draught beer excise, in what it describes as a win for drinkers, brewers and businesses.

The freeze is for two years and starts from the next due indexation date in August. Indexation changes are made twice a year, with the most recent one in February.

The government says the cost to the budget would be $95 million over four years from 2025-26.

The Australian Hotels Association had previously called ^[1] for a freeze on the excise for drinks sold in pubs, clubs, bars, and restaurants.

In a statement, the government said the move would “take pressure off the price of a beer poured in pubs, clubs and other venues, supporting businesses, regional tourism and customers”.

Last week it announced relief for Australian distillers, brewers and wine producers.

At present brewers and distillers get a full remission of any excise paid up to $350,000 each year. The government said it would increase the cap to $400,000 for all eligible alcohol manufacturers and also increase the Wine Equalisation Tax producer rebate cap to $400,000 from July 1 next year. That was estimated to decrease tax receipts by $70 million over five years from 2024-25.

Prime Minister Anthony Albanese described the temporary excise indexation freeze as “a commonsense measure”.

Treasurer Jim Chalmers said, “This is a modest change but will help take a little bit of pressure off beer drinkers, brewers and bars”.

The AHA recently labelled the excise a “hidden” tax, saying it put pressure on the cost of living. It said Australia’s beer tax was the third highest in the OECD.

The industry and Chalmers had a skirmish over the recent indexation increase. Chalmers said it would equal less than one cent a pint, and warned outlets not to “rip off” or mislead consumers.

Chalmers wrote to the Australian Consumer and Competition Commission asking it to monitor outlets in February to make sure they “do not take undue advantage” of the rise to “mislead” customers about the impact.

The federal government introduced the beer excise in 1988, with the tax linked to inflation. The AHA said in September that the recent jump in inflation meant the beer excise ^[2] rose 8% over the previous six months.