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Australian govt expects AU$280m spirits tax loss

The Australian government has predicted a AU$280 million (US$173.7m) annual revenue loss from spirits tax for 2024-25.

Holly-Bass-&-Flinders
Holly Klintworth says the drop in spirits revenue is an “unintended consequence” of the tax hike

In the Australian government’s Mid-Year Economic and Fiscal Outlook (MYEFO) publication for the current financial year, 2024-25 – released in December – the revenue figure for spirits has been revised to AU$331 million (US$205m) from the AU$359m (US$223m) amount originally estimated in the budget delivered in May 2024.

This is also down from 2023-24’s AU$320.8m (US$199m) spirits revenue and 7.8% lower than the AU$359m amount budgeted for the sector.

The current duty placed on spirits in Australia is AU$103.89 (US$64) per pure litre of alcohol, an amount that is scheduled to rise again on 1 February, in line with the twice-a-year increases. It will be the 76th tax hike the country’s spirits producers have faced since automatic indexation came into play in 1983.

Furthermore, in the Australian Bureau of Statistics’ monthly consumer price index (CPI) indicator, referenced to November 2024, the CPI has risen by 2.8% with alcohol listed as a ‘significant’ contributor to inflation, after a price increase of 4.1%.

On the impact the Australian distilling industry continues to face with the automatic hikes, Holly Klintworth, president of the Australian Distillers Association, told The Spirits Business: “The Australian Bureau of Statistics confirmed this month that alcohol taxes were one of the top contributors to annual inflation, up 4.1% in the year to November 2024.

“This follows the federal government’s mid-year economic and fiscal outlook (MYEFO), which revealed a AU$290 million fall in annual forecasted revenue from the spirits sector.

“These updates are emblematic of the unintended consequences of a 40-year-old tax policy that is no longer fit for purpose. Analysis completed by Deloitte Access Economics in 2024 revealed that spirits excise is the largest barrier to growth facing Australian distillers.”

In the lead up to the previous excise increase, we spoke with insiders on the toll the hikes place over the country’s spirits sector.

Dan Hamilton, managing director of Diageo Australia, has said that the tax is “by far the number-one challenge” the nation’s producers face.

For Klintworth, who is also managing director and head distiller at Victoria-based Bass & Flinders Distillery, believes it is time the government “realised the potential to create the next export powerhouse”.

She added: “By bringing our policy settings into alignment with a growing domestic industry of some 700 distilleries, the Australian government can not only repair the impact to their bottom line but unlock the Australian spirits industry’s untapped potential to become a AU$1 billion exporter – following in the footsteps of our successful wine industry.

“Australian distillers want the world to experience what our consumers already know – that nothing tastes like Australia.”

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