Tax hikes on spirits kicked in this week

04 February, 2016 by Stefanie Collins

By Andy Young, editor TheShout

Monday saw the half-yearly automatic indexation of alcohol excise increase kick in, with cases of ready-to-drink spirits and bottles of spirits seeing the largest rises.

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The automatic increases were introduced by the Hawke government in the 1980s and today’s increase adds 29 cents in duty on a slab of RTDs. The duty increase on a 700ml of spirits at 37.5 per cent ABV, will be 17 cents.

The increase does also mean that the duty on a 30ml nip of spirits will also rise, by one cent. Brandy is also seeing its duty rise, with a 700ml bottle increasing by 16 cents and a 30ml nip going up by one cent.

The duty on an individual 375ml RTD can will increase by one cent, while on a six-pack the duty increase is seven cents.

The ATO has confirmed with TheShout that there will be no change in the duty on light or full strength beer that is served on-premise.

Gordon Broderick, the executive director of the Distilled Spirits Industry Council of Australia, told TheShout that the increase highlights the difference between the spirits and wine industries and called on the Government to implement changes recommended in the Henry Review.

“The six monthly insidious increase on spirits excise kicks in today and spirit drinkers now pay $1.03 per standard drink in excise plus GST compared to six cents per standard drink in cask wine. There are 10 other tax rates in between on the various beverages,” he says. “For a Government committed to tax reform the alcohol tax regime is ripe for the picking and the blueprint has already been provided in the Henry Review.”

Broderick went on to add that spirits drinkers deserve a fairer go, as they already pay the second highest rate in OECD countries.

“The DSICA continues its campaign for greater equity and encourages consumers to join the Fix my Tax campaign,” he says.

Kylie McPherson, corporate relations and legal director with Diageo Australia agreed this was a timely reminder to the government that the alcohol tax system should change.

“It’s disappointing to see spirits slugged yet again with a tax hike on the back of the latest CPI increase,” McPherson says.

“While the increase impacts both beer and spirits, the impact is greater on spirits as it’s on top of an already higher excise rate of more than $1 per standard drink (compared to around 43c for full strength beer).

“The high rate of tax is felt particularly by consumers of pre-mix drinks who are paying almost twice the price for a slab of RTDs versus beer because of the higher tax rate. This is despite the fact they both contain similar amounts of alcohol.

“With today’s CPI increase, the tax on a slab of pre-mix is getting close to $40 – that’s the same as a consumer pays for a slab of beer in some retail outlets.

“We urge the Government to prioritise fixing alcohol tax as part of its tax reform process and to stop this unfair and unsustainable form of taxation which has seen the tax on spirits increase by almost 60 per cent in the last 15 years.”