The Australian government, led by the Labor party, has announced a two-year freeze on the biannual indexation of the excise tax applied to draught beer.

This decision, set to take effect in August 2025, is framed as a measure to alleviate some of the financial burdens faced by beer drinkers, brewers, and hospitality businesses.

Currently, the excise tax is adjusted twice yearly based on inflation rates.

Under the new plan, this adjustment will be paused, which is expected to cost the federal budget approximately $95 million over the next four years.

According to estimations, the freeze will result in a savings of roughly 18 cents for a 48-litre keg of mid-strength beer, translating to less than one cent per pint, which retail prices range from $10 to $18 depending on the establishment.

Prime Minister Anthony Albanese characterized the freeze as a "common sense measure" supporting local businesses.

Treasurer Jim Chalmers referred to the action as a "modest change" but noted its potential to ease some of the financial pressure on consumers and hospitality providers.

In conjunction with the excise freeze, the government plans to raise the excise remission cap for brewers and distillers from $350,000 to $400,000 beginning in July 2025. This tax incentive allows producers to reclaim a portion of the tax they have paid, further aimed at bolstering the alcohol production sector.

Winemakers will also benefit from the new rebate structure.

The brewing and hospitality industries have long advocated for a freeze or reduction in the excise, citing Australia's alcohol tax as among the highest globally.

Stephen Ferguson, CEO of the Australian Hotels Association, stated that the excise rates had remained unchecked for four decades and expressed concern regarding the declining patronage of pubs and bars amid the ongoing cost of living crisis.

Representatives from the brewing sector welcomed the freeze as a step towards alleviating operational challenges, emphasizing the necessity to balance tax revenue with support for social hospitality venues.

They underscored a commitment to work with the government on further consultations regarding the overall approach to alcohol taxation.

However, the decision to freeze the excise specifically on draught beer has drawn criticism from spirits producers.

The chief executive of Spirits & Cocktails Australia remarked that there was no justification for differentiating between alcoholic beverages in this manner, stating that the existing tax rates on spirits are significantly higher than those on beer.

Concerns have been voiced about perceived favoritism towards the beer sector.

The most recent adjustment to the alcohol excise occurred in February 2025, with a tax increase of between 2 to 3 percent.

The Labor government's freeze will come into effect following the federal election, expected to happen by May 17, 2025. Additionally, a parliamentary inquiry into food and beverage manufacturing has suggested the establishment of a new committee to examine Australia's alcohol industry comprehensively.