Distillers push moratorium on spirit excise increases, but Alcohol and Drug Foundation warns against it
The federal spirit excise is increasing again this month, as it does every six months in line with inflation.
Distillers say the tax is rising so rapidly it’s crippling businesses, but the Drug and Alcohol Foundation warns any change to the regime would put more people at risk of harm.
Calls for moratorium, to fix ‘unbearable’ tax
Several years of inflationary pressure have seen the excise on spirits jump 15 per cent in three years.
That means more than half the cost of an average bottle of spirits is taken in tax.
For one of Australia’s most famous rum makers, Bundaberg Rum, the tax paid on a one-litre bottle is 63 per cent.
The chair of the Bundaberg Distilling Co, Amanda Lampe, labelled it “outrageous”.
“We do our best to make our products as affordable as possible for our customers as we grapple with increases in energy, raw materials and freight costs, but the way we’re taxed makes this a real challenge,” Ms Lampe said.
“We are asking the government to do an immediate freeze for two years to give everybody a break so we can start to have a discussion about how we can fix this unbearable tax.”
The company is campaigning against the excise, which generates $5 billion dollars for the government each year.
Industry group Australian Distillers Association’s chief executive Paul McLeay said the campaign had their backing.
“Every time this increase goes up, a medium-sized distiller has to make that decision, ‘Which one of our staff are we going to lay off?'” Mr McLeay, said.
“How is that good for building regional economies and a future made in Australia when the tax is more than half per bottle?”
In a statement, federal treasurer Jim Chalmer’s office said the latest increase was the usual, legislated, automatic indexation change that happened twice a year under governments of both persuasions.
“We listen respectfully to ideas put to us, but these have to be weighed up against other priorities and within budgetary constraints,” a spokesperson said.
‘Sin tax’ historical hangover
Australia has the third highest spirit tax in the world, behind Iceland and Norway, and the excise on spirits is more than double what it is for beer.
The spirit tax applies to all alcohol that is not beer, wine or brandy, which are taxed at different rates.
It was one of the first forms of tax in Australia, introduced in 1901, but it was not until the early 1980s that the policy was changed to tie the excise to CPI every six months.
“The current policy settings were established 40 years ago, back when there were only two distilleries in Australia,” Mr McLeay said.
“There are now nearly 600 distillers in Australia and these policy settings are impacting them in a way that was never conceived when the policy settings were made.”
The excise is often referred to as a “sin” tax, thought to have been imposed to offset the social and health impacts of products like alcohol.
Total alcohol consumption in Australia has been steadily decreasing since the 1960s, but retail sales have never been higher.
Mr McLeay said Australians were drinking less but better.
“We want to encourage people to continue that journey of drinking less, but more premium products,” he said.
“But when you have the tax going up disproportionately at such high rates, it makes those decisions for consumers harder.”
Balancing harm
The Alcohol and Drug Foundation is unapologetic about the spirit excise and warns against any watering down.
Policy manager Robert Taylor said spirits were taxed more than other alcoholic beverages because of the greater risk of harm.
“The point of the excise is to keep alcohol prices roughly consistent with other pricing in the economy,” Mr Taylor said.
“Alcohol that’s becoming cheaper, if it’s not keeping up with the rate of inflation, is more attractive and consumed more, and is drunk more by people who are more at risk of harm from alcohol.”
Australian Bureau of Statistics data shows alcohol-related deaths have been steadily rising over the past 10 years.
“We are in a period where alcohol availability and harm is increasing, and we know that when people are under pressure, when the cost of living is high, people might be under financial stress, we know they might be likely to drink more,” Mr Taylor said.
“We want to make sure that people are safe and that we’re maintaining the consistency and integrity of the taxation system and its public health effect.”
Tax hikes ‘out of control’
Kalki Moon is a family business run by Rick and Kylie Prosser in Bundaberg, 400 kilometres north of Brisbane.
Mr Prosser said they always factored in the spirit excise, but it was getting “out of control”.
“Most distilleries in Australia are mum and dad businesses in regional areas, and this constant increase in excise has really damaged our businesses,” he said.
Since opening in 2017, Mr Prosser said there had been 13 excise rises, from $84 per litre of pure alcohol to more than $100.
“What’s happened with the RBA lifting interest rates over the past 18 months has really hurt the tourism industry,” he said.
“We’ve just come off the back of a very slow Christmas and it’s been a tough financial year with the cost of living because that disposable income has tightened up.”
SOURCE: ABCNEWS