Call to freeze spirits duty in Australia

Spirits industry bodies in Australia are calling on local policymakers to follow the UK’s example in freezing alcohol tax.

Twice a year, the excise tax on spirits in Australia increases in line with the consumer price index (CPI). From 1 August 2023, spirits tax rose by 2.2%, following a record 4.1% jump last August and a 3.7% hike in February.

Earlier this week, UK chancellor Jeremy Hunt confirmed in his autumn budget statement that alcohol duty in the UK will be frozen until 1 August 2024.

The announcement came nearly six months after spirits tax rose by 10.1% in the UK, marking the biggest alcohol duty increase in almost 50 years.

Nicole Lestal, director of trade body Spirits & Cocktails Australia, said Hunt’s move demonstrated that alcohol tax must ‘keep pace with changing economic circumstances and industry dynamics’.

“Spirits sales in the UK fell by 20% immediately following the unprecedented 10.1% August duty rise, crippling the distilling industry and putting a dent in the government’s coffers,” she said.

“The UK’s Office for National Statistics found the most recent tax increase contributed to the largest rise in UK inflation ever recorded.”

Lestal said spirits excise in Australia has risen by 12.5% in under two years, from AU$88.91 (US$58.42) to AU$100.05 (US$65.75) per litre of alcohol, fuelling inflation and cost-of-living pressures.

“Alcohol beverages on their own accounted for 5.03% of total CPI composition in the September quarter this year,” she added.

Australian Distillers Association chief executive Paul McLeay warned that spirits tax has increased more than 70 times since the current excise regime was introduced in 1983, when there were only two spirits producers in the country.

“There are now more than 600 businesses subject to this tax, which is no longer fit for purpose,” McLeay noted.

“With another excise increase for the Australian spirits industry due in February, we call on the federal government to follow the UK’s lead and ease the pressure on Australians by freezing spirits excise.”

In other Australian news, sales in the country’s night-time sector surpassed pre-pandemic levels in 2022 after reaching AU$146 billion (US$92.5bn).