The Federal Government has confirmed that Australia’s spirits tax will increase again next week, to $103.89 per litre, the 75th tax hike since Paul Keating introduced automatic indexation in his first Budget as Treasurer in 1983.
Spirits & Cocktails chief executive Greg Holland said Keating’s Budget speech of the day demonstrates it is completely absurd that these tax increases are still continuing in 2024.
“The new system will afford a greater degree of stability for consumers and industry alike.
Paul Keating, August 1983 Budget Speech
“These traditional excises will rise gradually in line with inflation and as wages and other incomes themselves increase.”
“Automatic indexation was introduced to suit the economic conditions of the day. It was never intended to continue indefinitely,” said Holland.
“Far from rising ‘gradually’, as Mr Keating intended, spirits tax has now increased by almost 20 per cent in the last four years.
“Far from providing ‘stability’, the Australian spirits industry is now suffering from an extremely unstable investment environment, thanks to these tax hikes every six months.
“As for wages? Australia today has some of the worst real wage growth of the OECD’s 38 member nations.
“Further increases to this tax simply do not pass the pub test.”
Australian Distillers Association chief executive Paul McLeay said the current excise burden is even more egregious, given the evolution of the spirits manufacturing industry over the last 41 years.
“There were only two distilleries in Australia when these six-monthly tax hikes began in 1983,” he said.
“Today there are 700 distilleries and we want to work with the Federal Government to build a major export industry that Australians can be proud of, just like our globally renowned wine industry.”
McLeay also noted Treasurer Jim Chalmers’ recent statement that Australia, ‘has been dealt the most incredible cards as a country’.
“The Treasurer was speaking in relation to the Government’s domestic manufacturing agenda, and in the case of spirits, his words certainly ring true,” said McLeay.
“We have unrivalled access to base ingredients like grains, sugarcane and grapes, rare native botanicals for gins and liqueurs, and an incredible inventory of wine barrels for maturing dark spirits.
“It would be a terrible shame if this enviable opportunity was squandered by continued Government inaction on spirits tax.”