AUS: RTD tax hike to take chunk out of Diageo proifts
Diageo has warned that it expects this year's tax hike on RTDs in Australia to hold back profits going forward.
In May, the excise on RTDs in the country was increased from A$39.36 (US$36.95) per litre of pure alcohol to A$66.67, with the federal government saying that the move was aimed at curbing binge drinking among teenagers.
Speaking exclusively to just-drinks last week, John Pollaers, president of Asia Pacific Diageo, attacked the decision, claiming that it was "probably based on the more immediate needs of the Government than a long-term view on taxation".
With RTDs accounting for 60% of Diageo's business in Australia, Pollaers said, the company is getting "some compensation" from full-strength spirits, "but there will be a gap this year. We've suggested that that will impact us by in the order of GBP25m (US$44.6m) in profit terms."
Pollaers added that he hoped the Australian government will realise that "the basis under which they made that decision wasn't valid. We continue to believe that one consistent rate of taxation across all forms of alcohol makes sense. Of course, that's going to take some time.
"It'll be challenging to have this particular one unwound, but the Government has announced a broad range review of alcohol taxation."
Earlier this summer, Federal Treasurer Wayne Swan dismissed claims from the drinks industry that the tax hike had failed in its objectives. "You have got to be really wary about listening to the special pleading of the liquor industry in this," Swan was quoted as saying. "They will take any set of figures and slice and dice them at any time to suit their argument because they were making a motza out of this (binge drinking of RTDs).
"We've put an end to it," Swan continued. "Well, they can go jump."
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