Bad news for alcohol drinkers as tax on spirits set to rise

Drinkers are facing another hike in the cost of liquor, with Australia’s tax on spirits set to tip over the $100 per litre mark for the first time.

Already paying some of the highest taxes on spirits in the world, Australians are being warned to expect further cost increases.

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Distillers and spirits manufacturers are calling for a freeze on alcohol excise rises as the price peaks at a milestone it had not been expected to hit before 2029.

The excise tax on spirits increases twice yearly in line with the Consumer Price Index (CPI).

The latest excise increase follows hikes of 4.1 per cent last year and another 3.7 per cent in February.

Australian Distillers Association chief executive Paul McLeay said the increases were unsustainable, and it was crucial to support the industry comprising more than 600 distilleries — primarily small family-owned businesses in regional areas.

“If the government is serious about building a broader, deeper industrial base and the creation of manufacturing jobs in the regions, it must reconsider this punitive excise regime that disincentivises producers to invest in and grow their businesses,” he said.

The tax hike compounded industry-wide challenges, he said.

“Unfortunately, we have already witnessed a few insolvencies this year, and this latest spirits tax increase will be extremely difficult for distillers to stomach,” McLeay said.

Australia already has the third-highest spirits tax in the world, Spirits & Cocktails Australia’s chief executive Greg Holland said.

“Approaching the $100 per litre threshold six years earlier than previously forecast must surely give the Federal Government pause to reconsider this handbrake on the spirits industry,” Holland said.

“Australia already has the third-highest spirits tax in the world. These automatic excise increases can’t continue unchecked. If not now, when will it stop?”

Diageo Australia, the company behind Queensland’s iconic Bundaberg Rum Distillery, said the current tax regime was becoming “unbearable”.

“We know our loyal Bundy consumers love our product, but many of them don’t know that more than 60 per cent of the money they already pay for a bottle of Bundaberg Rum UP goes straight to the taxman in Canberra, and that tax keeps growing and growing,” managing director Angus McPherson said.