Draft beer tax cut sent back to the drawing board

Even coalition MPs (22 of whom signed a letter supporting the excise duty cut) thought it was more or less a done deal, as Tasmania Gavin Pearce told his constituents on Facebook under the headline “cheap beer update”.

Notice that the proposal details made it clear who would benefit the most. This was a tax cut not for trendy bars, bottled craft beer brewers, restaurants or other growing sectors of the alcohol market, but specifically for the mature corner pub and besieged. And to its employees and suppliers.

Draft beer is beer sold on tap and on tap. Which is almost always the type of beer produced by members of the Brewers Association of Australia (which represents major brewers Lion, Coopers and Carlton & United Brewers), and sold in pubs similarly represented by the AHA and the aforementioned Clubs Australia, all of which have spent months (and probably millions) lobbying for an excise duty reduction.

In this trifecta, the AHA wields the most political influence. A major and generally equal-opportunity funder of political parties, he has been known to heavily divert his funds one way if given a reason. The latest developments must delight Labor fundraisers in key battlefield seats.

But for both parties, the politics of this proposal remain diabolical. Health and anti-alcohol groups understandably lamented the reduction in excise duties. Like economic purists skeptical of the “cheap beer” campaign and culture warriors like André Boulon (who argued that it was literally “pissing money against the wall”).

But making it even trickier was that not even the entire liquor industry was on board.

Restaurant & Australian restaurant manager Wes Lambert did not support reducing excise duties, calling instead for a broad reduction in alcohol excise taxes that would benefit its (similarly struggling) members as well as those of the AHA. Head of Spirits and Cocktails Australia Greg Holland was even more scathing, portraying the proposed reduction as a handout to older male drinkers who ignored the majority of women who preferred to be stuffed with wine and spirits.

A different, broader proposal could probably bring those groups on board, but wouldn’t give pubs the same benefits, which kind of defeats the point.

Alas, 12 years later Ken Henry looked at alcohol taxes in Australia as part of his broader review of the tax system, the system remains as “incoherent”, “contradictory” and “distorting” as he found it. Although the government is holding firm on the excise on draft beer, at least it hasn’t gotten worse.

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