Record tax hike is unsustainable and threatens Australia’s spirits industry: Associations cry foul

AUSTRALIA – Two leading associations supporting Australia’s spirits industry and its producers, Spirits, Cocktails Australia, and the Australian Distillers Association, have described the excise hike as a “cruel blow” for an industry already hit hard by high inflation.

Earlier this week another crippling 3.7 percent rise in excise hit spirits producers in Australia, taking the tax on spirits in Australia to nearly $100 (US$69) per liter of alcohol.

Spirits and Cocktails Australia’s Chief Executive, Greg Holland said: “This latest excise hike means that spirits producers are now staring down the barrel of paying $100 per liter of alcohol. Australia already pays the third highest spirits tax in the world, with the impost worsening every six months due to these automatic CPI increases.”

He argued that the six-monthly tax hike is felt by spirits producers right across the nation, adding that it is a handbrake on the jobs, investment, and innovation needed to help our industry truly compete on the world stage.

The spirits sector delivers $11.6bn (US$8bn) in total value-add to the Australian economy and employs around 5000 people in manufacturing.

Australia’s spirits industry does understand the challenges facing the Federal Budget, according to Australian Distillers Association chief executive Paul McLeay.

He considers this is the right time to consider “modest changes” to current spirits excise arrangements to unlock opportunities for investment and growth.

McLeay called for a simpler, fairer tax system that will turbocharge the investment environment for spirits producers, both domestic and global, to create premium drinks for local consumers, as well as grow export markets.

According to McLeay, it will be a win-win by having sensible and modest reforms from a Federal Government aiming to build up the capability of domestic manufacturing industries.

The Associations see a fraction of the potential that the Australian spirits industry represents–and that will continue while the manufacturers are made to suffer this crippling tax system.

In August 2022, Geelong distiller Sebastian Reaburn from Anther Distillery told AFR Weekend the federal government makes more from the sales of a bottle of spirit than the producer and the retailer.

He said it was rare the tax per bottle is less than $30, so if the bottle retails for $35 (US$24), then the retailer and the producer are fighting over $5 (US$3.5).

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