Australia spirits tax hikes ‘completely absurd’
The Federal Government of Australia has confirmed the country’s spirits tax will rise from AU$101.85 to AU $103.89 per pure litre of alcohol on 5 August.
This latest rise means Australia’s spirits tax has increased by nearly 20% in the past four years and is the 75th hike since August 1983, when Paul Keating linked the tax to the consumer price index (CPI) in his first budget as treasurer.
Spirits & Cocktails chief executive Greg Holland described the continuing increases as “completely absurd” and far from what the former treasurer intended.
At the time, Keating’s budget speech in August 1983 stated “the new system will afford a greater degree of stability for consumers and industry alike” and the excises “will rise gradually in line with inflation and as wages and other incomes themselves increase”.
Commenting on the latest excise, Holland said: “Automatic indexation was introduced to suit the economic conditions of the day. It was never intended to continue indefinitely.
“Far from providing ‘stability’, the Australian spirits industry is now suffering from an extremely unstable investment environment, thanks to these tax hikes every six months. As for wages? Australia today has some of the worst real wage growth of the OECD’s 38 member nations.
“Further increases to this tax simply do not pass the pub test.”
Continued government inaction
Australian Distillers Association chief executive Paul McLeay said that considering how the country’s spirits sector has evolved over the past 41 years, the current excise burden is “even more egregious”.
McLeay pointed to the fact there were only two distilleries in Australia when the hikes came into existence, however there are now 700.
He said: “We want to work with the Federal Government to build a major export industry that Australians can be proud of, just like our globally renowned wine industry.”
In a recent statement, treasurer Jim Chalmers said: “Australia has been dealt the most incredible cards as a country”. McLeay agrees and believes Chambers was speaking about the government’s domestic manufacturing agenda, and in the case of spirits, the statement “certainly rings true”.
McLeay continued: “We have unrivalled access to base ingredients like grains, sugarcane and grapes, rare native botanicals for gins and liqueurs, and an incredible inventory of wine barrels for maturing dark spirits.
“It would be a terrible shame if this enviable opportunity was squandered by continued government inaction on spirits tax.”
This week, McLeay has spoken out about the ‘relentless increases’ that happen twice a year, which have caused Australia to have the third-highest spirits tax in the world.
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