The scheduled August excise hike has been paused for the first time since 1983.

The twice annual excise rises are based on the Consumer Price Index, which is published by the Australian Bureau of Statistics and is designed to provide an idea of price inflation in Australian households.

The CPI indexation factor for rates from 3rd August 2020 is 0.9850, and as the factor is less than one, the excise rates will not change, according to the ATO.

A number of alcohol manufacturing lobby groups including the Independent Brewers Association and the Brewers Association of Australia called for excise relief during COVID-19. Excise deferment was made possible during COVID-19, but the alcohol industry was not successful in lobbying for a freeze.

Updated: Following the publication of this article, the IBA responded with general manager Kylie Lethbridge saying that while the freeze was a welcome relief

“However, it doesn’t really help brewers who have deferred their excise payments because of the impacts of COVID-19.

“We’re facing challenging economic times for our country, and what indie brewers really need is a permanent reduction in beer tax or an increase on the excise rebate. Every cent counts and will allow us to keep employing our fellow Aussies.

“We experience some of the highest beer taxes in the world and now, more than ever it makes sense to put measures in place to help independent, Australian owned brewers recover and grow, not to cripple them.”

The Australian Tax Office also confirmed the freeze saying: “There will be no change in the rates of excise duty that will take effect on and from 3 August 2020.

“Under the law, the rates of excise duty on spirits, beer, other excisable beverages and certain petroleum products are ordinarily increased bi-annually in February and August. The bi-annual rate changes are based on upward movements in the consumer price index. The latest CPI data from the Australian Bureau of Statistics shows a downward movement in the CPI – accordingly, there is no change in the relevant rates of duty.”

Brett Heffernan, CEO of the Brewers Association, which regularly lobbies against excise increases, said in a statement prior to the announcement that Australian’s pay the fourth highest beer tax in the industrialised world.

“Tax on Aussie-made beer reaps more than $2 billion a year for the federal Treasury. That doesn’t include the GST on the excise or the GST collected at the retail end, which comes in at another $1.5 billion,” he said.

It’s already a tidy earner. So what would freezing the rate, across both beer and spirits, cost the government in forgone extra revenue over the next 12 months?

“A lousy $70 million. It might sound a decent amount, but in the context of the federal budget it’s a rounding error.

“We are under no illusions that capping excise is a long-term fix. It isn’t. But every little bit helps and now is not the time to increase taxes.”

Following the freeze, he said that while it was good that “consumers will be spared the extra tax hit” the CPI fall is due to poor economic performance because of COVID-19.

“It would be better for the government to remove the ambiguity and uncertainty of future tax increases by freezing the excise rate for, at least, 12 months as part of the October Federal Budget. It will essentially cost them nothing to do so, but give the sector and consumers much-needed certainty,” Heffernan said.