Budget brief: Craft brewers win long-fought excise tax relief

Tomorrow’s budget might not contain a Santa sack of presents for small businesses, but Treasurer Scott Morrison has thrown one small win the way of the local craft brewing sector.

Independent beer brewers have long bemoaned tax arrangements that see smaller brewers pay a higher level of tax on smaller kegs, meaning craft brewers face hefty tax bills compared to their multinational competitors.

In June 2017, a coalition of craft brewers in Sydney’s inner west banded together to lobby for a change to taxation arrangements. At the time, independent brand Willie the Boatman told SmartCompany its tax bill was around $20,000 a month because it brewed beer in kegs smaller than 48 litres.

At present, kegs of 48 litres or less with an alcohol volume of up to three percent attract an excise tax of $42.50 per litre of alcohol.

On Friday, Treasurer Scott Morrison agreed to change the rules, announcing that the budget papers will include a policy to tax all beer kegs the same way if they hold eight litres or more. This would mean brewers paid around $8.50 per litre for all containers that hold more than eight litres. The same policy will also apply to distillers if they use containers of the same size.

In a statement, Morrison said the policy would assist 380 craft brewers and 100 domestic distillers across Australia. The exact dollar cost of the changes to the budget bottom line is expected to be outlined in tomorrow night’s budget papers.

As part of our commitment to unleash the potential of Australian small businesses, the Turnbull Gov will increase the amount brewers & distillers can claim back on their excise and extend the concessional draught beer excise rate to smaller kegs used by craft brewers. #auspol pic.twitter.com/CYueKE59iO

— Scott Morrison (@ScottMorrisonMP) May 5, 2018

In a press conference on Friday, Morrison said the craft brewing scene is a “dynamic, new industry that has been growing up in Australia” and small businesses in the sector deserve a more level playing field. 

However, Labor was quick to point out that it had long been calling for a change in this area, with shadow infrastructure minister Anthony Albanese heavily involved in the campaign to change the tax rules.

Brewers media conference @BoatmanPat celebrating a fairer deal for #CraftBeer ???? pic.twitter.com/iHT8QW5Jn6

— Anthony Albanese (@AlboMP) May 4, 2018

Albanese called the move a “victory” for people power.

Press conference with brewers shortly @BoatmanPat in Tempe on #peoplepower victory for craft beer tax reform ???? pic.twitter.com/GvyW641TSy

— Anthony Albanese (@AlboMP) May 4, 2018

NOW READ: What it takes to run a successful craft beer business in Australia