If Australia scraps its 'beer tax,' could pub culture and live music revive?

The escalating price of beer in Australia, a concern for many, is largely attributed to a long-standing government policy: the excise tax on alcohol is indexed to inflation. This means the tax automatically increases every six months, keeping pace with rising prices and contributing to some of the world's most expensive beer.

This continuous price hike is impacting Australia's cherished pub culture and the viability of live music venues. The cost of regularly going out for a drink has become prohibitive for many, leading to a decline in patronage. The article poses a thought experiment: what if the beer excise tax were abolished for five years? It questions whether pub culture and the night-time economy would subsequently thrive and if the cultural and economic advantages would outweigh the government's lost revenue.

The relentless increase in beer prices adds to a broader sense of economic pressure felt by Australians. The nation is currently grappling with high inflation, stagnant productivity growth, declining real wages, and deteriorating economic growth per person. For those reliant on wages and renting, the situation is compounded by record-low rental affordability. The article draws a parallel to a 1894 cartoon, suggesting that despite the passage of time, the struggles of wage workers remain strikingly similar.

The policy of six-monthly indexation for excise rates was introduced in the 1983-84 federal budget by the Hawke Labor government. The then-federal treasurer, Paul Keating, stated the aim was to maintain the "real" (inflation-adjusted) value of the government's excise revenue. However, the article argues that at a time when people are seeking relief from economic stress, the mechanical and regular increase of the "beer tax" through bipartisan policy serves as a constant drain on morale.

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