The Labor government has announced it will deliver a two-year freeze on the beer excise, but not all drinkers will benefit from the move.

Excise duty rates on alcohol are reviewed twice each year – in February and August. The latest increase, on February 3 of this year, saw the cost of pub beers exceeding 3.5 percent go from $43.22 per litre to $43.39. While excise duty rates are charged at the point of manufacture, this still means that the cost is passed on to the consumer.

This temporary two-year freeze – promised ahead of an election that will be held in the midst of a crippling cost-of-living crisis and coming into effect in August of this year – will only affect draught beer. Brewers who manufacture tinned or bottled beer and spirits distillers will miss out. 

Related story: We need a drink. A new alcohol tax will send the cost of spirits soaring

Credit: NewsWire/Tim Pascoe

“Good for beer drinkers”

“Freezing the excise on draught beer is a common sense measure that is good for beer drinkers, good for brewers and good for pubs,” the Prime Minister said, announcing his policy plan at the Bob Hawke Beer and Leisure Centre in Sydney’s Marrickville on Saturday, March 1.

Federal Treasurer Jim Chalmers admits that the freeze is a “modest change”, but that it “will help take a little bit of the pressure off beer drinkers, brewers and bars”.

However, Shadow Treasurer Angus Taylor claims that freezing rates now is too late for the 4000 hospitality businesses that have “hit the wall”, with the price of alcoholic beverages increasing by almost 11 percent since Labor came to office. The Coalition has also matched Labor’s tax-freeze pledge ahead of the election.

Meanwhile, Australian Hotels Association CEO Stephen Ferguson has welcomed the news, saying, “This is a win for the millions of men and women who like to go down to their local and have a beer. There’s no better place to have a beer than down at the local pub… we employ more than 300,000 people and a tax freeze helps support these jobs.  

“It’s a win for common-sense in the middle of a cost-of-living crisis – every little bit makes a difference.”

Related story: Coffee prices expected to hit up to $12 a cup by end of 2025

Credit: iStock

Tax breaks for brewers and distillers

The beer excise freeze announcement comes on top of new tax relief announced by Labor on February 22 for Australia’s distillers, brewers and wine producers.

Currently brewers and distillers get a full remission of any excise paid up to $350,000 each year. This remission cap has now been increased to $400,000. The Wine Equalisation Tax producer rebate will also increase from $350,000 to $400,000. However, these changes won’t apply until July 2026.

Ferguson says that this will provide tax relief for brewers, distillers and wine producers, but will do little for anyone struggling to afford a drink at a pub.  

“Unfortunately, that benefit is likely to be absorbed by those businesses, with little benefit, if any, flowing on to consumers,” he said in a statement.

Credit: Getty Images/Lauri Patterson

How much is beer taxed, and why?

Excise duty is a tax charged on commodities that are harmful to people or the environment – so there are excise duties on things like tobacco products, alcohol and fuel. The general idea is that by making these products cost more, people will use them less. Alcohol excise rates are based on the upward movement of the consumer price index – this measures the household cost of products and services in our capital cities. The amount charged is also based on the strength and packaging size of the product. For instance, bottled beer is taxed at a higher rate per litre than draught beer. This tax is applied to brewers and distillers, who then usually pass the cost on down the supply chain – ultimately to the consumer. 

Related story: Who’s round is it anyway? The brutal beer tax threatening the future of pubs