Beer producers are calling for huge tax cuts to help struggling pubs following crippling Covid-19 lockdowns.
The Brewers Association is calling for Scott Morrison to slash the draught beer tax in half, a move that could save a small pub $465 each week.
That saving could be passed on to consumers in the form of lower prices or used to pay down debt and keep the pub alive, said chief executive John Preston.
If the saving were passed on entirely, a feel-strength schooner could be about 25 cents cheaper.
It comes after draught beer sales dropped by a third last year as lockdowns kept punters from pubs and clubs.
Mr Preston said a big tax cut in the May budget could ‘help hospitality sector as they cope with the ongoing impact of mandatory closures due to lockdowns and other restrictions such as capacity limits.
A 50 per cent reduction in the excise rate on draught beer would deliver a massive boost to hospitality business owners at a relatively small cost to the government,’ he added.
The group’s modelling has found that halving the tax to draught sales would cost the Government $150 million out of total current beer tax revenue of $2.5 billion.
Beer tax in Australia is the fourth highest in the world after Norway, Japan and Finland.
It is estimated that, including GST, 42 per cent of the cost of carton of full-strength beer goes straight to the taxman.
‘Beer anchors pubs and clubs, and these businesses need a break,’ said Mr Preston.
How does Australia rank on beer tax compared to other countries?
Australians pay the 4th highest beer tax in the industrialised world.
The CEO also said any tax reduction would benefit the brewing industry which supports 100,000 jobs and the farming industry which supplies millions of dollars of produce for making beer.
He said the government should at least freeze the rate and stop the current automatic increases every six months.
The drop of 30 per cent in draught beer sales compared to the previous year represents a drop in beer sales by pubs and clubs last year of just over $1 billion – a devastating loss for the hospitality and brewing sectors.
In April and May 2020 beers sales for pubs and clubs dropped 94 per cent and 96 per cent.
Overall beer sales across both the hospitality and retail sectors (i.e. through bottle shops and pubs and clubs) were down for the year by 2.6 per cent.
Overall, 373,500 kegs had to be tipped with the costs borne by the sector.
That’s around 44 million schooners in lost sales to the brewing industry and our hospitality sector.