Venue operators across Australia face a lose-lose situation on Monday with a $1.67 rise in the spirits tax, taking it up to $105.98 per litre of alcohol: do they absorb that cost, or pass it on to price-conscious consumers?
While draught beer drinkers can enjoy a tax freeze for the next two years, spirits drinkers will continue to pay more. Many across the industry have welcomed the beer tax freeze and are simply calling for equality across all drinks.
Night Time Industries Association CEO Mick Gibb said: “Weʼre not asking for special treatment, just equal treatment. Freezing the beer excise is a great thing, but we can’t leave behind the small bars, live music venues and performance spaces that aren’t running beer taps.
“These smaller venues have been doing it tough for a long, long time. Every time the excise goes up, venues have to make a tough choice – they either try to absorb the flow-on cost of spirits and cut spending on things such as live performances and bands, or they pass it on to price-conscious consumers. It’s a lose-lose situation.
“Excise relief shouldn’t be dictated by whether you have a draught beer or a Margarita. You should be able to get the same sort of relief, regardless of what you drink. That’s all we are asking from the Government, to match the excise relief given to draught beer to spirits as well. It’s a very modest ask.”
Sydney bar owner Dre Walters is one of those facing the cost dilemma that Monday’s tax hike will bring. In previous years, he has absorbed one of the two tax rises into his business costs but said doing that is becoming increasingly difficult.
“Excise increases twice a year, and for us, we usually eat one of them and then pass on as little as we can to the customer, and we have been doing that for the last eight or nine years. But now it’s at that point where you can’t really eat anymore.
“If you start eating more and you still have wages to pay, rent to pay, and it’s really starting to impact that. I have friends that have restaurants and bars, we all talk, and the general consensus is that business is down 10 to 15 per cent. It’s not down because the product isn’t good, or the quality of the food isn’t great, it’s down because the price of alcohol is expensive.”
Cameron Mackenzie, General Manager of the Australian Distillers Association, described the pending tax increase as “incredibly disappointing”.
“Itʼs not just another tax hike, itʼs a significant one that distillers and hospitality venues simply canʼt absorb,” he said.
“In the end, itʼs customers whoʼll be left paying more for their favourite spirits.
“The Australian distilled spirits industry drives local manufacturing, creates jobs and boosts tourism and hospitality, with 50 per cent of distilleries located in regional communities. This tax hike hits everyone: producers, venues and consumers whoʼll see higher prices for their favourite gin and tonic.”
Walters added: “To operate any hospitality business in Australia is hard, and having something increase twice a year is a huge burden, and it’s something that you can’t control. We’d love to see the Government share the excise hold on spirits, RTDs, everything. There is no reason why it shouldn’t be fair for everyone drinking.”
Australia has an exciting night-time economy, with globally recognised and awarded bars, and Gibb said these incredible venues are under threat because of the biannual tax increases.
“Spirits excise in Australia is one of the highest in the world, and that means that we’re at a competitive disadvantage to other countries, particularly for these small business owners and for our already thriving bar scene.
“Imagine if we took that handbrake off. Imagine what we could accomplish if we started to enable these small businesses, these world-leading small bars, to thrive without this consistent pressure of an excise increase every six months – that’s a huge opportunity for small bars.”