Australian drinkers to pay more with twice-yearly tax hike set to come in to effect

Australia’s twice-yearly tax hike on alcoholic drinks is set to come into effect as distilleries and brewers call for an easing of the hikes, warning of hits to the hospitality industry. Here’s what you’ll pay.

Distilleries and brewers are warning of a hit to Australia’s hospitality sector and local tourism unless the federal government freezes the twice-yearly tax hike on beer and spirits.

From Monday, Australian drinkers will be paying $101.85 in tax per litre of pure alcohol, with the cost of a pint expected to rise by about 90 cents.

The alcohol excise automatically increases twice a year in line with inflation, but industry groups are warning in the middle of a cost of living crisis the decades-old tax scheme has gone too far.

Despite the government predicting revenue from alcohol taxes will bring in $7.86 billion in revenue this financial year, the sector says will be offset by losses elsewhere in the economy.

Paul McLeay from the Australian Distillers Association. Picture:

Australian Women in Distilling Association president Kristy Booth-Lark. Picture: Mireille Merlet

Australian Distillers Association chief executive Paul McLeay said 600 distilleries around the country would be worse off as a result of the “outdated and archaic tax policy”.

“We can give (the government) a domestic manufacturing industry on a silver platter, but we can’t do it with one hand tied behind our backs with this unsustainable tax.”

Bundaberg Distilling Company chair Amanda Lampe said about 63 per cent of the cost of a one litre bottle of Bundaberg rum was going straight to Canberra.

“That is unsustainable,” she said.

“This tax goes up again on Monday, it will go up in August and then again in February net year – it’s an infinity tax.”

Holly Klintworth is the head distiller and owner of Bass & Flinders Distillery, a Victoria-based micro distillery. She described the tax as “really painful”. Picture: Hollie Adams

For many patrons, an increase in alcohol prices means changing drinking habits.

Friends Nathan McInulty, Amelia Daley and Harry Bolton said that as alcohol continues to get more expensive, they try to go out for happy hour and buy less drinks in a single session.

“It won’t stop me drinking,” Mr McInulty said.

“But I’ll often order less and drink slower.”

But even prices during pub happy hours have increased.

Ms Daley said while a pint of beer at her local pub costs $10 during happy hour, five years ago it was almost half the price.

Nathan McInulty, Amelia Daley and Harry Bolton enjoy some beers at the Dove and Olive Hotel in Surry Hills. Picture: John Appleyard

Licensee of popular Surry Hills pub Keg and Brew Emily Smith agreed that even happy hour has had to become more expensive as prices have risen.

“When I first started here three years ago a beer during happy hour was around $4, now they’re $6.5,” she said.

“We do expect the price of alcohol to go up but it doesn’t make it any easier, especially at a time when everything is so expensive.”

Licensee Emily Smith pours a beer at the Keg and Brew Hotel in Surry Hills. Picture: John Appleyard

Brewers Association of Australia chief executive John Preston said the tax hike was “another blow for brewers, anyone who operates a venue and beer drinkers”.

“The price of a pint is going past $15, it’s just getting too expensive for people,” he said.

Australia has among the highest beer taxes in the world, behind only Norway and Finland, while countries like the US and Japan have taken steps to slash tax to support the industry.

In Tasmania, Killary Distillery founder and Australian Women in Distilling Association president Kristy Booth-Lark said the tax had flow on effects to a range of industries including hospitality, farming and tourism.

“We’ve got some amazing distilleries down here and we put a lot back into the local economy, but this tax is becoming quite crippling for a lot of distilleries, and we are starting to see some of these businesses close which is really sad,” she said.

Bass & Flinders Distillery managing director Holly Klintworth said the tax was “really painful” for small businesses like her family’s in the Mornington Peninsula.

“It’s disheartening because the industry has so much potential to be unlocked, yet these tax

increases signal that the government doesn’t recognise that potential,” she said.

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