A new alcohol tax increase has taken effect in Australia, meaning consumers are set to face more expensive drinks, particularly spirits, from this week onwards. The excise duty on popular spirits including vodka, rum, whisky, and gin was raised in line with inflation, marking a significant hike that will impact both the hospitality sector and everyday drinkers.
Details of the Tax Increase on Spirits
The excise duty on spirits exceeding ten per cent by volume has been increased from $105.98 per litre to $107.99 per litre. This adjustment, which came into force on Monday, is part of a biannual indexing process that occurs in February and August, directly tied to upward movements in the consumer price index. Typically, this tax is initially paid by manufacturers and distillers before being passed down the supply chain to venue owners and ultimately to consumers.
Industry Reaction and Consumer Impact
Mick Gibb, the chief executive of the Night Time Industries Association, highlighted the challenges posed by the high tax rate. He noted that while there has been progress in developing vibrant 24-hour cities, the rising cost of mixed drinks and cocktails is turning a night out into a luxury for many consumers. For venue owners, especially those operating small bars, these twice-yearly tax hikes present considerable difficulties in budgeting and operational sustainability.
Steven Fanner, the executive director of Spirits & Cocktails Australia, provided a stark illustration of the tax burden. He explained that approximately $32 of the price of a standard 700mL bottle of gin or whisky now constitutes tax paid directly to the government. This figure underscores the significant financial impact on consumers who enjoy these beverages.
Calls for Tax Freeze Extension to Spirits
While beer drinkers remain protected from the current tax hike due to an existing freeze on draught beer excise, the spirits industry is advocating for an extension of this measure. The draught beer excise pause is currently scheduled to last until August 27, but it does not apply to packaged or bottled beer. Industry officials estimate that extending the freeze to include spirit-based beverages would add around $5 million per year to the existing scheme, which already costs the budget an estimated $95 million.
Mr. Fanner argued that applying the freeze to tap spirits as well as tap beer would ensure that more people benefit from this cost-of-living measure when enjoying a drink with friends on a Friday night. This call highlights the ongoing debate within the industry about equitable tax treatment and support for consumers during times of economic pressure.
The latest tax rise comes at a time when many Australians are already grappling with broader cost-of-living increases, making the affordability of social activities a growing concern. The hospitality sector, still recovering from pandemic-related challenges, now faces additional financial strain from these regular tax adjustments.
