The world’s third highest tax on spirits will be increased yet again on 5 August, punishing cash-strapped consumers and inflicting more damage on Australia’s promising spirits manufacturing sector.

Spirits & Cocktails Australia chief executive Greg Holland says the impending tax increase simply cannot be justified in the current economic circumstances.

“Enjoying a drink with friends is one of life’s few simple pleasures for Australians who are currently struggling with the cost of living,” he says.

“Sadly, this custom is increasingly being priced out of reach for many people, thanks to relentless alcohol tax hikes every six months.”

Holland said it is now abundantly clear that the automatic indexation of excise to CPI 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 that 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 $101.85 per litre, the tax is already so absurdly high that it has lured organised crime syndicates into the bootlegging of illicit alcohol*.

“And, 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.”

‘Ready’ Made In Australia

Australian Distillers Association chief executive Paul McLeay said the current excise regime is at odds with the Government’s objectives of boosting domestic manufacturing and trade.

“The Government has allocated $22.7 billion over the next decade to its Future Made In Australia policy, which we are fully supportive of,” he said.

“However, we hope these lofty ambitions will not be at the expense of quicker wins in developing manufacturing sectors with strong growth prospects, such as distilling.”

McLeay said there are now more 700 distilleries in Australia that are Ready Made to deliver a $1 billion export industry by 2035, as demonstrated in economic modelling undertaken for the Australian Distillers Association by Mandala Partners.

“We don’t need billions in Government funding to make this happen, just some relief from these untenable six-monthly tax increases,” he said.

“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.”

ENDS

*Fake booze: 'It's scary and the public needs to be warned' (The Age, 27 April 2024)