New Alcohol Taxes on the Horizon: Analysts
By Ian Neubauer
The alcohol industry may face excise tax changes as the government looks for ways to shore up receipts in the face of its mounting deficit, according to a major investment bank.
Citi Australia analysts Andy Bowley and Craig Woolford have warned that the staple nature of alcohol consumption and public support for the war on binge drinking make the industry a prime target for more tax grabs.
Citi Australia has formulated a number of scenarios it believes will transpire independently or in tandem – in addition to the re-introduction of the RTD tax hike – when the federal budget is released later this year.
Scenarios include the removal of the value-based wine equalisation tax (WET), the introduction of volumetric taxation for wine and, in a the worst-case scenario for the industry, a tax hikes across all categories of alcohol.
Citigroup warned the changes could deeply impact the profitability of the country’s largest suppliers, Foster’s Group and Lion Nathan, but that Coca-Cola Amatil (CCA) would likely remain unscathed.
“With 86 per cent of group profits generated in Australia, Lion is the most exposed to tax changes among our beverage universe. However, changes to the current WET regime in wine could impact Foster’s to a greater extent. In contrast, CCA, given its limited exposure to alcohol beverages, is relatively immune from excise changes in our view.”
And in related news, the Distilled Spirits Industry Council of Australia released a statement today (Apr 27) marking the 12-month anniversary of the introduction of the RTD tax hike, saying the hike had failed to curb or even reduce youth binge drinking.
To read the Citigroup report in full, click here.