Drink taxes might leave Anthony Albanese crying in his beer

Australia pays some of the highest alcohol tax rates in the world and while the ever-increasing price of booze isn’t Albanese’s fault, it could become his problem, writes James O’Doherty.

Death and taxes may have been the two certainties in 1789 when Benjamin Franklin said that nothing else was definite, but since 1983 there has been a third certainty in Australia: the inexorable increase in the price of booze.

The slow but steady march of excise indexation has led Australia into paying some of the highest alcohol tax rates in the world.

That tax of $103.89 per litre of pure alcohol will increase again next month in line with inflation, due to the biannual tax hikes on booze.

Each increase is small, but like a dripping tap that will eventually fill a bucket, indexation - if left unchecked - will continue to drive up the price of a round for punters already at the limit in a cost of living crisis.

Already, about half the cost of a slab of beer goes to the taxman. For a bottle of spirits, the excise makes up as much as 63 per cent of the cost.

The ever-increasing price of alcohol could become Albanese’s problem Picture: NCA NewsWire / Damian Shaw

With the price of schooners and spirits set to increase again in just over a week, distillers and brewers are now screaming out for relief to help their industries, and punters, survive.

And it will hit the major parties where it hurts: marginal seats.

In marginal seats across regional NSW, Bundaberg Rum will now take out advertising space on billboards and in pubs to blame the Commonwealth government for the high price of a Bundy and coke.

The idea among the industry is to pressure the Coalition into committing to freezing excise indexation, which is already a policy of the Nationals party room.

When Littleproud first suggested a cut to booze taxes last year, he was quickly slapped down by Treasury spokesman Angus Taylor.

But since then, it appears the mood is beginning to shift.

“We want to reduce as many taxes as we possibly can, when we can afford it, and the alcohol excise sits within that remit that the Coalition will consider,” Nationals Leader David Littleproud tells me.

Deputy Liberal leader Susan Ley and National leader David Littleproud. Picture: NewsWire / Martin Ollman

Deputy Liberal Leader Sussan Ley has left the door open to considering tax changes.

When asked about alcohol taxes on Adelaide radio earlier this month, she said the Coalition was “looking at everything when it comes to tax,” declaring she was “sympathetic” to publicans and punters.

“We always say that under our side of politics, taxes will be lower, simpler and fairer,” she said.

Taylor is refusing to rule it out.

“The Coalition will release its full tax policies ahead of the next election,” he says.

Beyond the righteous outrage incurred when someone is slugged $13 for a schooner, the ever-increasing tax on alcohol presents another problem: growing black and “grey” market.

Even as tax rates rise, the amount of money the government will raise in alcohol excise has been downgraded by almost $2 billion over the forward estimates.

People are finding ways to avoid a tax which is increasingly becoming unaffordable.

In this financial year and the next, Treasurer Jim Chalmers is now expecting to get a $660 million less in tax on beer and spirits than was predicted in last year’s budget.

Some Industry focus groups are hearing stories of people brewing their own beer or distilling their own spirits, and it is not too hard to find bottles of grog imported from overseas that have escaped local taxes.

The Australian Taxation Office estimates that some $700 million was lost in 2022-23 due to illicit activity.

It is not too hard to predict where this ends, because it has already happened with another so-called “sin tax”.

Cheap contraband cigarettes are so commonplace that it’s almost a novelty to find a smoker who pays full-freight to get their fix legally.

That is costing the economy billions of dollars in lost tax revenue.

Former Prime Minister Scott Morrison had a crack at cutting beer taxes before the election, but the plan was ultimately scuttled, as parts of the liquor industry were going to miss out.

Now, though, the industry is united across distillers and brewers all calling for a sector wide freeze.

Chalmers is not for moving - although the government is seeking to deflect the blame.

“This is the usual, legislated, automatic indexation change that happens twice a year under governments of both persuasions and it’s not a new decision of this government,” a spokesman says.

The ever increasing price of booze is not Prime Minister Anthony Albanese’s fault (indexation has been adding to alcohol prices for decades), but it could become his problem.

Beer mats and billboards in marginal seats reminding voters that 63 per cent of a bottle of spirits is going straight to the tax man is the last thing the PM would want in an election year.

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