A bizarre beer tax that slugs craft brewers 40 per cent more for using smaller kegs will be axed in the federal budget.
A two-tier tax system means draught beer sold in 50 litre kegs are currently taxed at $34 a litre, but beers in kegs under 30 litres are slugged $49 a litre.
"This is unfair for smaller brewery businesses," Treasurer Scott Morrison said in a statement on Friday.
The federal budget will extend concessional draught beer excises to smaller kegs, and increase the amount beverage companies can claim back.
Alcohol manufacturers can currently claim a refund of 60 per cent in the excise duty paid on beer and spirits of up to $30,000 a year.
This will increase to $100,000 from July 1 next year, and apply to all brewers and distillers for the first time.
"This not only champions the craft brewers that we've all grown to love, it raises a very tantalising prospect for Australians: the likelihood of cheaper craft beer," Mr Morrison said.
"These brewers are predominantly small businesses and could benefit both from the increase to the excise refund cap and extended access to the concessional draught beer excise rate."
Opposition frontbencher Penny Wong said it was a grand idea, which the coalition pinched from her Labor colleague Anthony Albanese.
"I think it's a good idea, and it's Albo's idea," Senator Wong told the Nine Network.
Mr Albanese described the "common sense change" as a victory for people power.
"Craft brewers deserve to operate on a level playing field with the big multinational beer brands," he said.
"And beer drinkers should pay the same regardless of what brand of beer they enjoy."
There are about 380 craft brewers across Australia employing about 2400 people.
