With the excise on spirits due to rise at the beginning of August, in line with the Consumer Price Index (CPI), the industry is calling for a freeze on the tax in line with the two-year freeze for beer, announced by the federal government in March.
Twice a year (February and August), the Australian Bureau of Statistics (ABS) updates the CPI, which provides the basis for indexation. The formula for spirits and other excisable beverages is the total volume (litres) of product x alcohol strength x current excise duty rate. The excise duty rate is set per litre of alcohol (LAL) for alcoholic products.
There are also other factors that influence the final price of spirits and other alcoholic beverages including the GST and wholesale and retail mark-ups.
The current tax on spirits is $104.31 per litre of alcohol and will rise again from 1 August CPI figures.
Australian Distillers Association general manager, Cameron Mackenzie, said, “This tax hurts our customers and more than 700 distillers across the country who want to share more of our products at Aussie pubs and clubs. We want a system that doesn’t favour one drink over another.”
The automatic indexation on beer and spirits was introduced by Paul Keating in his first budget at Treasurer, in August 1983. At the time, there were only two independent distilleries in the country.
The industry bodies said considering spirit-based drinks are also sold in pubs and clubs, alongside beer taps, it makes sense to bring spirits into line with beer.
Night Time Industries Association CEO, Mick Gibb, said, “Our members support the two-year tax freeze the federal government has applied to draught beer from August, but this relief should be extended to spirits and RTDs served in licensed venues too.
“Australia is home to globally renowned distilleries that are exactly the kind of modern manufacturing Australia needs more of – not less – to boost productivity. Helping to ease the burden of these twice-yearly tax hikes that act as a handbrake on industry, and punish our consumers, should be a priority.”
Spirits and Cocktails said, “We are seeing cocktails and RTDs becoming more and more popular in pubs and clubs across the country and we should ensure those customers aren’t left out when the freeze on beer comes into effect in August.”
For the last two years, Diageo’s Bundaberg Rum brand has run a campaign against the excise.
