Aussie pub owners and customers to score price relief under new push

The Coalition has signalled it could provide some much-needed relief to pub owners and customers. Alcohol undergoes a twice-yearly tax price adjustment due to inflation, which tends to raise the cost of a schooner at your local and a slab at the bottle shop.

It puts brewers and pub owners in a tricky spot as they're either forced to absorb the new cost or pass it on to customers, which could scare some away amid the cost-of-living crisis. Brewers Association of Australia CEO John Preston told Yahoo Finance the industry was desperate for the government to freeze the tax just on tap beer until the economic situation affecting everyone around the country eases.

Nationals leader David Littleproud has revealed the Coalition is looking at that exact measure if it wins the next election as it would "alleviate" some pressure on an already struggling industry.

"When they don't have disposable income it makes it even harder for them to come out not just to have a beer, but to have a meal," he told Channel 9.

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Labor has ruled out providing similar relief, with Health Minister Mark Butler saying the government's focus was on "cheaper medicines, not beer".

Anthony Albanese also stated earlier this year that his priority was providing "cost-of-living support" while also "putting downward pressure on inflation".

Preston claims freezing the tax just for tap beer at the pub would be monumental, but a reduction would be even bigger.

"A 40 per cent reduction in the draft beer tax would only cost the government $90 million out of a total beer tax revenue of $2.5 billion," he told Yahoo Finance.

"It's a rounding error, but it would really help beer drinkers who want to go out to the pub and have a beer."

Do you have a story? Email stew.perrie@yahooinc.com

Beer industry is on its knees

Brewers and pub owners have been very vocal about the impact of the twice-yearly excise on their industry.

Australian credit reporting firm, CreditorWatch, recently predicted the failure rate for the hospitality industry would jump from 7.5 per cent to 9.1 per cent in the next year.

That's one in every 13 hospitality venues closing their doors forever in just 12 months.

"The hospitality sector is in crisis," Preston explained to Yahoo Finance.

"We've heard about bars, cafes, restaurants, pubs, and what they're going through ... they're really struggling.

"This excise tax, they've got to pay it or they've got to try and pass it on. It's really bad news for pubs and clubs and for beer drinkers."

Sauce Brewing Co. founder Mike Clarke explained that many brewers like him will just have to absorb the cost out of fear that another price hike will turn too many customers away.

“We just have to absorb it … The reality is that customers can’t wear 10, 20 per cent price increases on something that is already a premium-priced product. So we’ll just have to grin and bear it for a while,” he told Yahoo Finance.

How does the beer excise tax work?

Every year, the excise on beer and other types of alcohol gets updated twice, once at the start of February and again at the start of August.

At the moment, for beer with alcohol above 3 per cent in an individual container less than eight litres, the tax is $61.32 per litre of pure alcohol, and pub beer tax is $43.22 for beers over 3.5 per cent.

"For beer, it also depends on the size and design of the container you package it in and if you produce it in commercial premises or a brew-on-premises shop," the ATO said.

How much the tax goes up depends on the consumer price index, which gets published just before the tax is updated.

The next round of indexation will hit on February 3.

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