In light of today’s announcement of a $47 billion dollar deficit in the mid-Year Economic and Fiscal Outlook (MYEFO), the distilled spirits industry is calling for an urgent reform of alcohol taxes to secure a predictable government revenue stream from alcohol sales.
Tim Salt, chairman of the peak industry group, the Distilled Spirits Industry Council of Australia says that the industry could provide much needed revenue to the government should it choose to move to a volumetric tax system – tax based on the volume of alcohol per serve.
“According to the Henry Tax Review, moving to a single volumetric tax system could add an extra $1.8 billion in revenue per year. Given the news of today’s $47 billion deficit, we think it’s time for the Government to take a serious look at reforming the alcohol tax system,” says Salt.
Salt adds that changing consumer tastes are also contributing to the amount of tax generated. A treasury report released earlier this month states that the government gained $580 million less from alcohol excise in FY13 compared to FY07. The difference of which has been attributed to consumers shifting from beer which attracts a higher tax, to wine which is taxed at a lower rate.
“The Abbott Government has inherited a convoluted tax system which has distorted the market. Moving to a single rate of volumetric tax across all alcohol products will not only stop consumers substituting lower taxed products for higher taxed products, it will also generate much-needed revenue,” said Salt.
Salt says that the move to a single rate of volumetric will not only create a more predictable revenue stream for the government, but it will also create a more sustainable alcohol industry that competes on a level playing field.
“Despite accounting for less than 19% of the volume of pure alcohol sold, spirits and RTDs contribute around 41% of excise revenue. This is not sustainable. With overall alcohol consumption declining, the Government needs to take a serious look at how alcohol is taxed if it is to stem any further loss of much-needed revenue.”