Cutting the excise on beer from kegs is an ineffective and inequitable way to support the hospitality sector, reduce cost of living pressures, and reduce excessive drinking according to a new report released by The Australia Institute.

“The overwhelming majority of beer drinkers in Australia are men, and the overwhelming majority of hospitality venues don’t sell beer from kegs. It’s hard to see how reducing the excise on draught beer is a good way to help the hospitality sector recover or help Australians cope with cost of living pressures,” said Dr Richard Denniss, chief economist at the Australia Institute.

The new analysis uses Australian Tax Office data to estimate the likely budget impact of the proposal, called for by the Australian Hotels Association and Brewers Association of Australia, to halve the excise payable on draught beer, and said to be under ‘serious consideration’ by the Federal Government.

Key Findings:

• According to the ABS 83% of beer drinkers are men, meaning they will receive the overwhelming proportion of any reduction in beer prices.
• If cutting the excise is considered a cost-of-living benefit, the policy may lead to a fall in the price of a pint of beer poured from a tap in a pub of a maximum 40 to 45 cents, half that amount for a pot or middy, and 2 to 3 cents for light beer.
• If the policy proposed by the AHA was introduced the estimated fall in Government revenue would be around $189 million a year, and $1 billion over 5 years.
• The lost government revenue could be kept by large brewers and hotel chains for themselves. This would mean no price decrease in consumer products, no increase in employment, no support for the live music sector, and no support for the large number of cafes, restaurants and bars that don’t sell beer from kegs.
• Proponents of the cut in beer excise have provided no evidence to support the conclusion that lowering the price of beer is the best way to spend $190 million to support the hospitality sector.

“Halving the excise on beer sold from kegs would cost $189 million next year and over $1 billion over the next five years. If the Morrison Government wants to help the hospitality sector and those who work in it, there are so many better ways they could spend $1 billion,” said Dr Denniss.

“Halving beer excise on draught beer represents a gender biased subsidy to alcohol consumption for men, undermines existing support for genuinely smaller brewers, and does nothing to support the restaurant industry.”