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Martini fans of Sydney, pour one out for your savings account. Australia's tax on spirits has risen again, with the federal excise on products like gin, vodka, whisky and rum increasing to $110.15 per litre of pure alcohol as of Monday, August 3. It’s not great news for drinkers, and it categorically sucks for venue owners – as explained masterfully by the brilliant Pasan Wijesena, owner of Sydney faves including Earl's Juke Joint and Jacoby's Tiki Bar.
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So what’s the deal? The latest automatic excise increase is one of the biggest six-monthly rises outside the pandemic period, pushing Australia even further up the rankings as one of the world's highest-taxing countries for spirits. According to the Spirits Council of Australia, we're now second only to Scandinavian nations when it comes to taxing hard liquor. What does that actually mean at the bottle shop? On a standard 700ml bottle of 40 per cent spirits, around $30.84 of the purchase price now goes straight to alcohol excise before GST is even added. The industry body says that's almost double the equivalent tax in New Zealand and more than six times higher than in the United States. For venue owners, that means costs go up, pushing up prices (and, sigh, pushing out customers).
"If the price of spirits keeps going up, soon we will be looking at $40 cocktails, something that is both undesirable and honestly untenable, as this prices out most of us from being able to go out and enjoy a drink with our mates," says Pasan. "Smaller independent venues will cease to exist, and you will just be left with large cookie-cutter corporate venues, catering only to those in the highest income brackets."
The Spirits Council of Australia is using the latest increase to renew calls for reform of Australia's alcohol excise system, which automatically rises twice a year in line with inflation. The organisation argues the current approach, which has been in place since the early 1980s, is making legal spirits increasingly expensive for consumers while putting additional pressure on distilleries, hospo venues (as mentioned above) and bottle shops.
"From this week the tax on spirits is now over $110 per litre of pure alcohol – a rate six times higher than the United States and about double New Zealand," said Spirits Council of Australia executive director Steven Fanner.
Fanner also warned that continually increasing prices could encourage consumers to seek out cheaper illicit alcohol, pointing to recent research that found illegal alcohol products being sold alongside legitimate bottles in Australian retailers, with some allegedly containing dangerous contaminants. The industry is drawing parallels with Australia's illicit tobacco market, arguing that repeated tax increases without stronger enforcement could create similar opportunities for black-market deals.
While the Council says it supports responsible alcohol taxation (the federal government is expected to collect $9.2 billion in alcohol taxes this financial year), it's calling for the current twice-yearly automatic excise increases to be reviewed, arguing the system should be modernised rather than left on "set-and-forget".
If you need some cheering up, we’ve linked to some happier news stories below.
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