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Alcohol tax: Aussies to be hit with high drinks prices

The tax on alcoholic spirits is set to top $100 per litre.

A composite image of a customer inside a Dan Murphys and people enjoying alcoholic drinks at a bar.
Aussies may soon be hit with higher alcohol prices as taxes increase. (Source: Getty / AAP)

Aussies looking to head to the pub or bar for their next celebration or catch-up with friends may soon find their favourite alcoholic drink just got more expensive.

Australia’s tax on spirits is set to increase to $100 per litre from $97.90, and Aussies are being warned about even more increases to come.

Distillers and spirits manufacturers have called for a freeze on alcohol excise rises, which increase twice a year in line with inflation.

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Australian Distillers Association CEO Paul McLeay said the increases were unsustainable and would hurt small family-owned businesses in regional areas the most.

"If the government is serious about building a broader, deeper industrial base and the creation of manufacturing jobs in the regions, it must reconsider this punitive excise regime that disincentivises producers to invest in and grow their businesses," he said.

"Unfortunately, we have already witnessed a few insolvencies this year, and this latest spirits tax increase will be extremely difficult for distillers to stomach.”

What will this mean for me?

Spirits - as well as wine and beer - are taxed per litre of alcohol present in the beverage. So, for example, a 700ml bottle of Bundaberg Red Rum has 37 per cent alcohol content - so the higher the alcohol content, the more tax is applied.

So, for a 1 litre bottle of Bundaberg Original - which retails at Dan Murphy’s for $65.99 - you’d be paying 78 cents extra if the full effect of the alcohol tax was passed on.

The increase in taxes is generally passed on to consumers through higher retail prices. So, when you purchase a bottle of spirits from a store or you order a drink at a bar, a portion of the price you pay goes toward covering the imposed tax.

Why does the government increase the alcohol tax?

For a number of reasons, but primarily to reduce public harm. Research has shown that higher alcohol prices result in less consumption.

But the government also makes a lot of money from the tax collected on alcohol. In 2021-22, the government expected alcohol tax receipts of around $8 billion, up from $6.5 billion in 2017-18, according to the Treasury.

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