In just a few days, Aussies will face another increase in alcohol prices as the biannual tax indexation takes effect. Australia’s alcohol tax system, which adjusts rates twice a year, has sparked frustration across the industry, with brewers, venues, and consumers all feeling the strain.
With costs already soaring due to inflation and other pressures, this latest excise adjustment is raising questions about the sustainability of the system. Let’s break down how it works, who’s affected, and how Australia compares globally.
Alcohol Excise
In Australia, the excise tax on alcohol is indexed to the Consumer Price Index (CPI) and is updated every February and August. This tax applies differently depending on the type and alcohol content of the beverage, as well as the size and packaging.
Here’s a quick look at the current rates:
| Alcohol Type | Tax Per Litre of Pure Alcohol |
|---|---|
| Beer (over 3%, <8L) | $61.32 |
| Pub Beer (over 3.5%) | $43.22 |
| Spirits (over 10%) | $103.89 |
For example, a 1L bottle of Bundaberg Rum costing $61.50 includes $38.40 in taxes. Meanwhile, 60% of the price of a packaged full-strength beer goes directly to tax.
This system means that every step in the supply chain—brewers, pubs, bottle shops, and ultimately, consumers—must decide whether to absorb or pass on the cost.
Impact
The constant tax increases are putting immense pressure on Australia’s hospitality and brewing sectors, both of which are already grappling with rising costs. Venue operators and brewers alike have expressed concerns about the unsustainable burden of excise taxes.
Mike Clarke, founder of Sauce Brewing Co., highlighted the dilemma: “You’ve got excise going up every six months, plus other costs like wages, transport, and electricity. Customers are already stretched, so it’s not realistic to keep raising prices.”
Clarke and others, like Dad & Dave’s Brewing, have opted to absorb the costs rather than risk alienating customers with steep price hikes. However, this approach comes at the expense of their bottom line.
According to operations manager Joel Meaney, “If we passed on every increase, what used to cost $10 would now be $14. It’s just not realistic for customers to handle.”
Industry Wants a Freeze
Key figures in the alcohol industry, including Bundaberg Distilling Co. chair Amanda Lampe, are calling for the government to freeze the excise and review the system.
Lampe argues that the tax disproportionately impacts manufacturers, venues, and even Australia’s tourism sector. “Tourism is critical to our economy, but when visitors see the high cost of food and beverages here, they may choose other destinations,” she explained.
She also warned that the cost-of-living crisis could force some businesses to slash jobs or close their doors entirely, further damaging the hospitality sector, which is already experiencing its highest failure rate since the pandemic.
Australia Compares Globally
Australia has some of the highest alcohol taxes in the world, ranking third for beer behind Norway and Finland. The spirits tax is seven times higher than in the United States and significantly exceeds New Zealand’s rate of $61.21 per litre of pure alcohol.
John Preston, CEO of the Brewers Association of Australia, has been vocal about the need for reform. “The hospitality sector is in crisis,” he said. “Excise tax increases are bad news for pubs, clubs, and drinkers. It’s time for the government to step in and provide relief.”
Cost to Consumers
For everyday Australians, these tax hikes mean paying more for a simple drink with friends. Lampe noted that for many, enjoying a beer or a spirit has become a luxury. “What our drinkers are telling us is that it’s becoming harder to justify a night out,” she said.
As businesses struggle to balance their books and consumers tighten their belts, the call for a more sustainable alcohol tax system is growing louder. Whether the government will respond remains to be seen, but for now, the price of a drink in Australia is only going up.
SOURCE – LINK
FAQs
Why does alcohol tax increase in Australia?
It’s indexed to the CPI and adjusted twice a year.
What is the current tax on spirits?
The tax is $103.89 per litre of pure alcohol.
How much of a beer’s cost is tax?
60% of a packaged full-strength beer’s cost is tax.
Which countries have higher beer taxes?
Only Norway and Finland have higher beer taxes.
What changes is the industry asking for?
A freeze on excise tax and a system review.
