Last August the excise on alcohol products did not go ahead, with the CPI indexation being less than one, meaning the rates did not change.
However, the reprieve has been a short one for the industry with the first of this year’s two CPI-indexed increases going ahead. The move has been blasted by Spirits & Cocktails Australia (SCA), as another blow to Australia’s spirit producers looking to try and bounce back from a devastating 2020.
SCA CEO Greg Holland said: “The hike in spirits excise today is another blow to hardworking Australian distillers at a time when they are battling to recover from COVID shutdowns.
“Australia already pays the third highest spirits tax in the world – and these automatic excise rises guarantee the burden will just get worse. It’s an unfair tax running out of control, threatening to strangle an industry that has the potential to take on the world.
“Many of our distillers stepped up in a crisis last year to manufacture sanitiser when it was in short supply. Now they need to get back to building their businesses, buying from Australian farmers, and creating jobs in their local communities.”
He added: “Australian distillers are already winning multiple awards around the world. Imagine what they could achieve if they weren’t being stifled by this unfair tax.”
The Brewers Association’s CEO John Preston, also expressed disappointment that February’s increase was going ahead, highlighting that other countries have gone the other way and cut taxes in a bid to bolster business and economies struggling through the pandemic.
Preston told The Shout: “Another excise increase is bad news for the hospitality sector, the Australian brewing industry and everyone who enjoys a beer.
“Many other countries, including recently the USA, have reduced taxes on beer to stimulate the economy and help households doing it tough. Any move by the Government to take the pressure off will be celebrated by the more than nine million Australian beer drinkers.”
Last year SCA worked with PwC on new modelling which showed that cutting Australian spirits tax could actually boost Government revenue and also help spirits producers recover quicker from the impact of COVID-19.
The modelling highlighted three options that would generate up to $1.4bn in additional tax revenue, over existing forward estimates, while also simplifying Australia’s alcohol tax system.