Australia’s spirits groups are calling for an end to the government’s “archaic” tax policy that will see alcohol prices increase this week for the second time in six months.

Since its introduction by Bob Hawke’s government in 1984, Australia has taxed consumer goods in line with the country’s CPI indexation by the Australian Tax Office.

Published on 31 January, the Australia CPI category of alcohol and tobacco was up 2.8% for the last quarter of 2023 ending December. As a result, the tax on one litre of pure alcohol is scheduled to be raised from A$100.05 to A$101.85.

In Australia, alcohol tax is paid at the point of manufacture or importation.

Referring to the 1984 tax policy, Spirits & Cocktails Australia CEO Greg Holland noted that: “That was a time when Australians were mostly drinking cask wine and Foster’s.

“If this tax was appropriate back then, it certainly isn’t now. Our tastes have changed in every way, with more and more Australians appreciating spirits as their preferred tipple in mixed drinks and cocktails.”

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By GlobalData

Holland is calling on the Australian government to freeze alcohol taxes at their current rate of A$100.05. The trade body wants to rework how alcohol is taxed in the country and move it away from automatic increases based on the country’s CPI data.

The CPI increases do not affect the taxation of wine in Australia as that is subject to a separate tax policy called the wine equalisation tax.

Criticism of Australian alcohol tax policy is not new. Last year, the two trade bodies representing the Australian spirits industry criticised a similar February increase in excise duty paid by the country’s distillers.

At the time, Spirits and Cocktails Australia and the Australian Distillers Association called the automatic rise linked to CPI inflation that takes place every six months as a “cruel blow”.

While acknowledging the challenges facing the federal budget, Australian Distillers Association chief executive Paul McLeay said then that “modest changes” were needed to present spirits excise calculations to enable the industry to invest and grow.

McLeay said: “A simpler, fairer tax system will turbocharge the investment environment for spirits producers, both domestic and global, to create premium drinks for local consumers, as well as grow export markets.”