Australia spirits excise ‘cannot be justified’
Spirits excise in Australia is due to increase on 5 August, with the industry stressing that the ‘relentless’ increases can no longer be justified.
The current tax on spirits, which was raised on 4 February this year, means distillers in Australia pay AU$101.85 per pure litre of alcohol. As it approaches another increase, Spirits & Cocktails Australia chief executive Greg Holland has stressed that it “simply cannot be justified in the current economic circumstances”.
Due to the cost of living and the biannual tax hikes on spirits, Holland believes Australians are being priced out of enjoying a drink with friends. He added that the excise has “outlived its usefulness as a revenue-raising measure”.
“The federal government’s own data has repeatedly demonstrated that rising alcohol excise is contributing to the stubborn inflation problem it is trying so hard to address,” he said.
“Meanwhile, our hospitality sector is on its knees. Another tax increase will only increase the cost burden on struggling venues. At AU$101.85 per litre, the tax is already so absurdly high that it has lured organised crime syndicates into the bootlegging of illicit alcohol.
“The government has repeatedly been forced to downgrade its spirits excise revenue forecasts, suggesting we have already reached the limit of what consumers are prepared to pay for spirits.”
Two-year freeze
Paul McLeay, chief executive of trade body Australian Distillers Association, has argued that the tax regime counters the Australian government’s objectives of boosting domestic manufacturing and trade.
The government has invested AU$22.7 billion (US$14.8bn) into its ‘Future Made in Australia’ industrial policy, which seeks to turn the country into a renewable energy superpower.
While McLeay fully supports the plan, he hopes it won’t be at the expense of “quicker wins in developing manufacturing sectors with strong growth prospects, such as distilling”.
He added that the Australian spirits sector could be an AU$1 billion (US$635 million) industry, according to The Spirits Industry Competitiveness Plan, which was prepared by research firm Mandala and commissioned by the Australian Distillers Association and Diageo Australia.
To make this happen, McLeay is looking for “relief, not billions” from the federal government – as the six-month increases are “untenable”.
He continued: “We are calling for spirits tax to be frozen at its current rate for two years. This would have a comparatively modest budgetary impact in the context of the government’s domestic manufacturing agenda.
“This would provide the stability for a broader review of spirits excise settings, so we can create the right conditions to attract capital investment, scale up manufacturing capabilities and grow exports.”
Australia has the third highest tax for spirits in the world, behind Iceland and Norway.
The constant rises have seen distillers at odds with the government, as opportunities for international expansion are blocked.
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