Cheaper craft beer likely as Treasurer takes axe to small keg tax

After denying he was going to be "Santa Claus", Treasurer Scott Morrison will sweeten the deal for craft beer connoisseurs in next week's federal budget by cutting an "outdated and ridiculous" tax rate applied to kegs.

Craft breweries have long complained they are at a disadvantage when compared to huge multinational brewers, because of the tax regime.

Beer sold in kegs that are larger than 48 litres have been taxed at a lower rate than smaller kegs, which in effect has favoured large producers.

Tuesday's budget will include a change to those rules, so that all beer kegs larger than eight litres will be taxed the same way.

"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," the Treasurer said in a statement.

Mr Morrison said there are about 380 craft brewers across the country, in an industry that employs about 2,400 people.

Labor MP Anthony Albanese, who has a Sydney brewery craft beer named in his honour, has long campaigned for the tax change.

He described it as a "common sense change" that was "a victory for people power".

"New breweries are being established across the nation and the development of the sector has also created a new tourism sector — craft brewery tours," Mr Albanese said in a statement.

"Craft brewers deserve to operate on a level playing field with the big multinational beer brands.

"And beer drinkers should pay the same regardless of what brand of beer they enjoy."

Alcohol manufacturers can currently claim a refund on the excise they pay of up $30,000. That will be increased to $100,000 from July 1, 2019.

That change will also impact the 100 distillers around the country.

"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," the Treasurer said in the statement.

Wine producers can claim up to $500,000 annually under the Wine Equalisation Tax (WET) rebate scheme.