Australian Distillers Association warns record spirits tax is fuelling Australia's illicit alcohol market

The Australian Distillers Association (ADA) has renewed its call for urgent reform of Australia's spiralling spirits excise, warning that today's latest automatic tax increase is placing unprecedented pressure on Australia's legitimate distilling industry while creating the conditions for a growing illicit alcohol market.

Australia already imposes the third-highest tax on spirits in the world, with today’s increase pushing it to $110.15 per litre of alcohol, yet excise tax has increased automatically every six months regardless of economic conditions, consumer demand or the challenges facing Australian manufacturers.

The Association warns that continually increasing the price of legal spirits widens the gap between legitimate products and untaxed illicit alcohol, making criminal activity increasingly profitable.

Australian Distillers Association CEO Kylie Lethbridge said the issue had moved well beyond the financial impact on distillers.

"This is no longer just a tax issue, it is a consumer confidence issue."

"Every excise increase makes legitimate Australian spirits more expensive while illegal operators continue to avoid tax altogether. Criminals don't pay excise, don't comply with food safety standards and don't care what ends up in the bottle."

Australia has already witnessed the devastating growth of the illicit tobacco market, where excessive taxation has enabled organised crime to flourish.

"We cannot afford to make the same mistake twice. If government continues to increase tax without considering the unintended consequences, it risks creating an environment where criminal enterprises thrive while legitimate Australian businesses struggle to compete."

The irony, the Association says, is that the businesses paying the price are the very stakeholders governments should be supporting.

Australia's distilling sector contributes more than $15.5 billion annually to the national economy, supports more than 100,000 Australian jobs, attracts over 630,000 distillery tourism visits each year, and has become one of Australia's fastest-growing premium food and beverage manufacturing industries.

"Our members are manufacturers, exporters, employers and tourism operators – with approx. 50% located in regional Australia. They invest in local communities, purchase Australian agricultural products and create skilled jobs."

They are doing everything government asks of them. They pay their taxes, comply with strict regulations and produce world-class spirits.”

The Australian Distillers Association is calling on the Federal Government to:

• Review Australia's 40+ year old taxation framework.
• to increase investment in compliance and enforcement to combat illicit alcohol production and distribution.
• Work collaboratively with industry to protect consumers while strengthening Australia's legitimate spirits sector.

The Association said Australia has an opportunity to support an industry with enormous export, tourism and regional economic potential, but only if government policy keeps pace.

"Australian distillers don't want special treatment, we simply want a fair and sustainable tax system that allows legitimate businesses to compete."