The Australian Taxation Office (ATO) has confirmed significant increases to alcohol excise tax rates starting February 3, 2025. This rise, part of the biannual indexation based on the consumer price index (CPI), spells bad news for beer and spirits lovers across Australia, as the costs for consumers are set to climb once more.
The new duty rates, which affect brewers and distillers first, will see prices for consumers increase substantially. Specifically, the excise duty for beer with over 3% alcohol will rise from AU$61.32 to AU$61.57 per litre, and for spirits over 10% alcohol, the tax will jump from AU$103.89 to AU$104.31 per litre.
Amanda Lampe, Chair of Bundaberg Distilling Co., expressed concern over the latest increases, noting the emotional toll on consumers. "What our drinkers are telling us is... it's becoming a luxury to have a drink with their friends on a Friday evening, and that's really sad," she stated, emphasizing the economic strain on the hospitality sector. Lampe's remarks underline the sentiment many feel as they navigate increasingly costly leisure activities.
The Brewers Association of Australia also weighed in, with CEO John Preston making a last-minute appeal to the government to halt the planned price hike. "On behalf of brewers and beer drinkers across Australia, we are asking for urgent action to address the high rates of beer tax," he said. He flagged the growing difficulties brewers face, warning the tax could potentially push them beyond viability, with independent brewers stating it might lead to pint prices soaring to AU$15.
Meanwhile, Treasurer Jim Chalmers has sought to alleviate public concerns by asserting the hikes would be minimal. He has emphasized the excise tax on a schooner of beer would add less than one cent. Speaking to the Daily Telegraph, he stated, "The extra excise on a schooner next week is less than one cent and don't believe anyone who tries to tell you otherwise." His assertion intends to calm fears of excessive price increases linked to the excise hikes.
Yet, many industry stakeholders beg to differ. They argue the cumulative effect of these taxes can no longer be ignored, especially as consumers already face mounting financial pressures. Australian Hotels Association chief executive Stephen Ferguson articulated frustration with the excise system, calling it "a dripping tap which delivers $6.2 billion of drinkers' money to Canberra already – and is budgeted to go up another $800 million by 2027." He lamented, "That's money out of people's pockets who can't afford it. Everyone knows a dripping tap should be turned off." Such comments reflect his frustration with what many perceive as punitive taxation policies affecting their businesses and patrons.
Greg Holland, the CEO of Spirits & Cocktails Australia, echoed these sentiments, cautioning against the impact of the latest excise increase. "The latest tax increase... will make it more expensive for consumers, more expensive for producers, and less competitive for spirits exporters," he stated. Holland pointed out the continuous rise of the excise tax over the years, which has escalated by around 20% since the pandemic began, putting additional strain on both local distillers and drinkers.
Overall, Monday will mark the 84th increase of the alcohol excise tax since its inception in 1983. Industry officials are urging the government to reconsider its stance on these hikes, especially during a time when countless businesses and consumers are grappling with rising living costs.
The hospitality industry, already struggling through the pressures of the pandemic recovery, now faces the uncertain prospect of maintaining profitability against the backdrop of these tax increases. With the prices of pint beers anticipated to soar and spirits becoming less accessible, both consumers and producers are left watching the economic climate with bated breath, hoping for potential relief amid growing frustrations.
The demand for urgent reevaluation of the alcohol excise system continues to grow, highlighting the need to strike a balance between government revenue and the long-term viability of Australia's hospitality sector.