Australia’s peak body for the Australian spirits industry, Spirits & Cocktails Australia (SCA) describes the excise hike of 1.4% announced by the Australian Tax Office over the weekend as ‘a kick in the guts to businesses already struggling with the impact of COVID lockdowns’.

It is the nineteenth excise hike rise in a decade for distillers.

SCA says that Australian distillers pay the third highest spirits tax in the world and that the increased tax rate, along with automatic increases twice a year due to CPI indexation, means that up to 60 per cent of the retail price of an average 700ml bottle of spirits is now tax. 

It says that taxes from the distilling industry, including the manufacturing of premixed spirits, increases by between $100-$120 million each year. 

“This is a never-ending tax with an ever-increasing appetite,” Spirits and Cocktails chief executive Greg Holland said.

“It has always been a handbrake on the growth of businesses that could otherwise be employing more staff, buying more local produce, exporting quality Australian products, and attracting more tourists to local communities. 

“But with COVID, this latest tax hike feels particularly savage. It’s a kick in the guts to the many distillers and manufacturers, pubs, bars and restaurants who are struggling in the face of repeated lockdowns and a decline in tourism.” 

SCA and the Australian Distillers Association are both calling on the Federal Government to freeze the excise increases for at least three years.

Mr Holland acknowledged the relief in the Federal Budget earlier this year when the Australian Government increased the excise cap for small distillers from $100,000 to $350,000.

However, he said that the return to automatic excise hikes looks like Canberra giving with one hand and taking with the other.

“The Budget’s increase in the excise cap was worth about $20 million for the industry. But today’s hike could drag up to five times that amount back in tax.

“That is an outrageous burden, imposed by the Federal Government, on a sector that could otherwise be replicating the growth of the Australian wine sector,” said Mr Holland.

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