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27 Jul 2022 6:21 PM | Anonymous member (Administrator)

A record hike in Australia’s spirits tax will be a crippling “double whammy” for distillers and spirits manufacturers already battling some of the worst conditions in the history of the industry.

The latest excise increase, based on CPI figures released today, comes on top of surging costs for freight, glass, cans and raw materials. The hike is estimated to translate to an additional $1 of tax to be paid on an average 700ml bottle of spirits (40% ABV).

“This is effectively a double whammy on spirits,” said Spirits and Cocktails chief executive Greg Holland. “It’s the biggest increase in almost 50 years, since our tax figures were updated in 1978, and in that time spirits manufacturers have been slugged with the GST and the RTDs (ready-to-drink) tax as well. “

Australia has the third highest spirits tax in world, under a complicated alcohol tax regime that has been condemned by multiple independent and government reviews.

“We know all Australians are feeling the pain of inflation but this outdated tax regime means the spirits industry is effectively punished twice,” Mr Holland said.

“Our members are already paying skyrocketing prices for inputs like barley, glass and cans, and facing freight charges that have more than doubled in some regions - and now they’re being asked to pay even more to the tax man.

“It is also important to remember government data shows most Australians are drinking more responsibly, often choosing to enjoy quality offerings like a gin and tonic, bourbon and coke, dark and stormy cocktail, or a good scotch or Australian whisky. On top of all the other cost of living pressures they’re facing, those millions of Australian consumers will now likely be slugged even more as a result of this excise increase.”

Australian Distillers chief executive Paul McLeay added: “This places an enormous burden on a local industry that barely existed a decade ago but is now highly acclaimed around the world, thanks to the hard work and creativity of Australian distillers. We should be celebrating them, not stifling them.”

Examples of cost increases over the past 6-12 months, as reported by the major spirits manufacturers operating in Australia and local distillers include:

  • FREIGHT up 55% (average across air/sea; domestic/international)
  • CEREALS up 50% 
  • SUGAR up 25-30 % 
  • GLASS up 20-30% 
  • OAK BARRELS up 16% 
  • CANS up 12%

Australia’s outmoded alcohol tax regime indexes spirits excise to inflation, creating a situation where the tax take from spirits compounds every six months and grows further out of proportion to other drinks containing the same proportion of alcohol. As a result, up to 60 per cent of the retail price of an average 700ml bottle of spirits in Australia is now tax.

Automatic increases in line with the CPI mean the Federal Government’s average tax take from the distilling industry, which includes the manufacturing of premixed spirits, increases by $100 million – $120 million every year.

Mr Holland said: “This tax is cannibalising our industry. It has an insatiable appetite; no matter how hard our distillers and manufacturers work to grow, it keeps taking more.

“We look forward to working with the new Federal Government to build a more sustainable future for the Australian spirits industry.”



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