Last week the federal government announced it is axing a beer tax that slugs craft breweries 40 per cent more simply for using small kegs.

The two-tier system – which favours large breweries and multinationals because they produce more beer – will be scrapped, with the Turnbull government declaring its plan for “levelling the playing field between craft and large breweries”.

At present, if a brewer produces beer in a 50-litre keg, it’s taxed $34 a litre, but if that same beer is brewed in a 30-litre keg the tax charged is $49 a litre.

This distinction will disappear from July 1, 2019, costing the government an estimated $85 million over the financial years from 2019 to 2022.

Labor MP for the western-Sydney seat of Grayndler Anthony Albanese is a long-time supporter of the Australian craft-beer industry and endorsed the decision on Twitter.

“Imagine if the rate of GST you paid on milk or fruit juice varied according to the size of its container,” he said in an opinion piece published on is website. “This is unfair to craft brewers who tend to sell their product in smaller kegs, particularly when supplying small restaurants and bars in their local communities.”

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Alcohol manufacturers can also currently claim a 60-per-cent tax refund on beer or spirits up to a maximum of $30,000 a year; from July 1 next year the cap will rise to $100,000 and will apply to all brewers and distillers for the first time.

Treasurer Scott Morrison said in an official statement both changes are good news for the 100 domestic distillers and around 380 craft brewers in Australia, an industry that employs around 2400 people.

Guy Greenstone of Melbourne’s Stomping Ground Brewing Co in Collingwood told Broadsheet he welcomes the change, as does Filip Kemp from Little Bang Brewing Company in Adelaide and Thomas Cauquil from Sydney’s Frenchies Bistro and Brewery, who says it will have a positive impact on employment.

But some craft breweries argue even with the tax changes, the current 50-litre keg bias will continue to impact smaller players.

Andrew Fineran, director of Batch Brewing Co in Sydney, says he won’t be changing the company’s operations unless demand increases for smaller kegs, saying: “We still have thousands invested in the 50-litre keg fleet because it’s just what pubs wanted because of the [existing] excise rate.”

Little Bang Brewing’s Kemp is in the same situation.

“Most breweries are set up and invested in 50-litre kegs due to the existing legislation,” he says. “If anything the beer price will go up as a brewery using smaller kegs will need to clean and fill more kegs for the same volume.”

So what do the tax changes mean for craft-beer drinkers? Will schooners soon be cheaper?

“For the end customer it means better beer at the same price,” says Frenchies’s Cauquil, “because it allows brewers to extend their range and increase visibility.”

Alistair Turnbull from Lobethal Bierhaus – a brewery and restaurant which employs 24 locals in South Australia – says: “In reality I expect any additional benefit will likely go toward the maintenance of old equipment and the purchase of new equipment, with little room to materially reduce our pricing.

“We have had to absorb semi-annual increases in liquor excise, multiple increases in energy cost, wages and the cost of a myriad of raw material items that all tend to increase annually.”

Likewise, Fineran from Batch Brewing Co says the extra rebate will go towards equipment and staff training. “If the extra $70,000 was put towards pricing it would mean five to ten cents off a schooner and a couple of bucks off for the pubs who buy from us,” he says. “The pubs would not pass such a small saving on to the consumer.”

Director of Melbourne-based Brewmanity David Neitz says for some businesses “it will be a matter of survival.”

“For others it will mean they can employ that much-needed person or invest in their current people at a rate they are worth, rather than relying on a 'love of the industry',” he says.

Many of the craft brewers expressed disappointment that the government didn’t address the tax inequalities between the wine and beer industries, but described the changes as a step in the right direction.

The only thing: “It is a shame that we will need to wait until July 2019 for the new rebate to commence,” says Turnbull.