Australians who enjoy a night out with friends at the pub are in for a bigger hit in the wallet from next month.
Drinks with a higher alcohol content, such as hard liquor in particular, will be subject to a higher excise tax, which is indexed to inflation every six months.
This means vodka drinkers will notice the difference far more than beer lovers if excise duty rises by 2 per cent, as Westpac predicts.
Spirits & Cocktails Australia chief executive Greg Holland said the upcoming tax increase simply could not be justified during a cost of living crisis.
“Enjoying a drink with friends is one of life’s few simple pleasures for Australians currently struggling to cope with the cost of living,” he said.
‘Unfortunately, this custom is increasingly out of reach for many people, thanks to the incessant increases in alcohol taxes every six months.’
Another high inflation reading for the June quarter, due on Wednesday next week, could hit vodka drinkers particularly hard.
Westpac expects consumer price index data to show a 1 per cent rise in prices over the final three months of 2023-24, following a 1 per cent rise during the March quarter.
Australians who enjoy a drink will pay more tax from next month
If excise duty were indexed every six months to inflation, that would mean a 2 per cent rise in alcohol taxes, if Westpac’s forecasts materialise.
Someone buying a one-liter bottle of vodka, with an alcohol content of 40 percent, would pay 81 cents more starting Aug. 5, as the excise tax rose to $41.55, from $40.74.
A one-liter bottle of Smirnoff now costs $61 at Dan Murphy’s.
The alcohol tax by volume would rise to $103.89 per litre, up from $101.85 currently.
However, a drinker enjoying a full-strength VB beer in a 375ml can would only pay three cents more in excise duty.
The popular beer, with an alcohol content of 4.9 percent, already has a tax of $60.12 per liter that will increase to $61.32.
For a can, the excise tax would only increase slightly, to $1.13 (from $1.10 currently).
For a $57 plate with 24 cans, the tax is $26.40, but would rise to $27.10.
John Preston, chief executive of the Australian Brewers Association, said it was a myth to suggest spirits drinkers were the only ones worse off.
“Almost 50 per cent of the price of a bar is federal tax, so it’s as significant for beer as it is for spirits – you buy a bottle of spirit and it lasts a lot longer than a bar of beer,” he told Daily Mail Australia.
Mr Preston said excise duties were contributing to the closure of pubs and clubs, with hospitality venues accounting for 15 per cent of Australian business insolvencies.
“This is another blow they don’t need,” he said.
‘Increasingly, pubs and hospitality businesses are struggling to stay afloat, with pub owners saying the rise in beer duty is making it unaffordable for people to go out for a pint.’
Mr Holland said the alcohol excise tax was contributing to Australia’s inflation problems, even though the tax has been indexed twice a year since 1983.
“The federal government’s own data has repeatedly shown that the increase in the alcohol excise tax is contributing to the persistent problem of inflation that the government is trying so hard to address,” he said.
Higher alcohol content drinks are subject to a higher excise duty, which is indexed to inflation every six months. This means that vodka drinkers will notice the difference much more than beer drinkers (pictured, a Sydney bartender).
But monthly inflation data for May showed alcohol prices rose 3.4 percent over the year, which was well below the overall inflation rate of 4 percent.
The excise duty is determined by quarterly inflation figures from the Australian Bureau of Statistics.
Westpac expects upcoming June quarter inflation data to show Australian headline inflation rising at an annual rate of 3.8 per cent.
That would be worse than the 3.6 percent pace in the March quarter, putting inflation even further above the Reserve Bank’s 2 to 3 percent target.
But over the three months to June, Westpac only expects alcohol prices to rise by 0.7 per cent.
