The UK Government’s decision to temporarily freeze alcohol duty is instructive for policymakers in Australia, according to the Australian spirits industry.

UK Chancellor of the Exchequer Jeremy Hunt on Wednesday announced a freeze on all alcohol duty until at least August next year, in recognition that further increases would mean less tax revenue for Treasury.

Spirits & Cocktails Australia director Nicole Lestal said the UK experience demonstrates that alcohol tax must keep pace with changing economic circumstances and industry dynamics.

“Spirits sales in the UK fell by 20 per cent immediately following the unprecedented 10.1% August duty rise, crippling the distilling industry and putting a dent in the government’s coffers,” she said.

“The UK’s Office for National Statistics found the most recent tax increase contributed to the largest rise in UK inflation ever recorded.”

Lestal said spirits excise in Australia, which increases twice per year, has risen by a total of 12.5% in under two years, from $88.91 to $100.05 per litre of alcohol, fuelling inflation and cost of living pressures.

“Alcohol beverages on their own accounted for 5.03% of total CPI composition in the September quarter this year,” she said.

Australian Distillers Association chief executive Paul McLeay said spirits tax has increased more than 70 times since the current excise regime was introduced in 1983, back when there were only two spirits manufacturers in Australia.

“There are now more than 600 businesses subject to this tax, which is no longer fit for purpose,” said McLeay.

“With another excise increase for the Australian spirits industry due in February, we call on the Federal Government to follow the UK’s lead and ease the pressure on Australians by freezing spirits excise.”