Treasurer Scott Morrison has confirmed an “outdated” tax on kegs will be cut from this year’s federal budget, which is welcome news to the more than 380 brewers across the country.

Beer kegs larger than 48 litres are taxed at a lower rate than smaller kegs, which puts craft breweries at a disadvantage compared to large producers.

Currently, a keg of full strength beer that exceeds 48 litres is taxed $34.87 per litre, while a keg of full strength beer smaller than 48 litres is taxed $49.50 per litre.

The budget will see this tax regime changed so all beer kegs larger than eight litres will be taxed the same amount.

Morrison told the ABC, the tax cut will likely result in cheaper craft beer.

“The extra help to craft brewers and distillers will drive competition in a sector currently dominated by large domestic and multinational brewers, opening the door to new products and will likely put downward pressure on prices,” he said.

The federal budget will also extend concessional draught beer excises to smaller kegs and increase the amount alcohol manufacturers can claim on the excise they pay.

Currently set at $30,000, the amount will be increased to $100,000 from 1 July, 2019 and will apply to all Australian brewers and distillers.

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