There are renewed industry calls for a spirits excise freeze, with Australia’s punitive excise and inflation issues not only dampening consumer demand, but also putting a hole in the Federal Budget.

The Federal Government released its Mid-Year Economic and Fiscal Outlook (MYEFO) this week, which reveals it faces a projected $170 million shortfall in its revenue for 2023-24 alone due to the impact of the excise hikes.

Spirits and Cocktails Australia said the data confirmed Australia’s current excise regime was untenable and must be urgently reformed.

Alcohol excise in Australia, which increases twice per year, has risen by a total of 12.5% in under two years, from $88.91 to $100.05 per litre of alcohol. The rises have come at a difficult time for consumers, who are already struggling with inflationary pressures on household budgets.

Spirits and Cocktails Australia chief executive Greg Holland said: “Declining spirits sales are now being reflected in the Federal Government’s tax coffers.

“This lower tax revenue is despite spirits excise having recently hit at an all-time high of $100.05 per litre of alcohol.”

Holland said the Budget update suggested the tax has reached a tipping point similar to that experienced in the UK, where spirits sales fell by 20 per cent immediately following an unprecedented 10.1% duty rise in August.

The UK government found the tax increase contributed to the largest rise in UK inflation ever recorded and lower tax revenue.

In November, UK Chancellor of the Exchequer Jeremy Hunt announced a freeze on all alcohol duty until at least August next year.

“With another excise increase for the Australian spirits industry due in February, we call on the Federal Government to follow the UK’s lead and better align alcohol taxation to the current economic conditions,” Holland said.

“The rate of spirits excise has increased, yet revenue is down. This tells us everything we need to know about the appropriateness of this tax in the current economic climate.”

Australian Distillers Association chief executive Paul McLeay said the rampant excise increases are putting the emerging local industry at risk.

“We now have more than 600 distilleries operating in all corners of Australia, the majority of which are in regional areas, contributing 5,000 manufacturing jobs to the Australian economy,” he said.

“Spirits excise in Australia has risen by a total of 12.5% in under two years, fuelling inflation and cost of living pressures on hard working Australians.

“As consumption is falling our spirits producers are also being hit with higher costs of production, and now they are facing another excise hike in February.

“We call on the Government to ease the pressure on the Australian industry by freezing spirits excise.”