Australians who enjoy a night out at the pub with friends will face an even harder time from next month.
Beverages with a higher alcohol percentage, such as spirits, are subject to higher excise duties. These are indexed every six months based on inflation.
This means vodka drinkers will notice the difference much more than beer lovers if the excise duty rises by 2 percent, Westpac predicts.
Greg Holland, CEO of Spirits & Cocktails Australia, said the impending tax increase was simply unjustifiable at a time when the cost of living was rising.
“Having a drink with friends is one of the few simple pleasures in life for Australians currently struggling with the cost of living,” he said.
‘Unfortunately, this habit has become unaffordable for many people due to the continued increases in alcohol excise duty that occur every six months.’
New high inflation for the second quarter next Wednesday could particularly bother vodka lovers.
Westpac expects consumer price index figures to show prices rising 1 percent in the final three months of 2023-24, following a 1 percent increase in the third quarter.
Australians who like a drink will pay more tax from next month
If Westpac’s predictions come true, it would mean that excise duties would be indexed to inflation every six months. This would mean that alcohol duties would rise by 2 percent.
Someone buying a one-liter bottle of vodka, with an alcohol content of 40 percent, will pay 81 cents more from August 5, because the excise duty has increased from $40.74 to $41.55.
A liter bottle of Smirnoff costs $61 at Dan Murphy’s.
The alcohol tax would rise from the current $101.85 to $103.89 per liter.
However, a drinker enjoying a normal strength VB beer in a 375 ml can pays only three cents more in excise duty.
The popular beer, with an alcohol content of 4.9 percent, is already taxed at $60.12 per liter. This tax would increase to $61.32.
For a can, excise duties would increase only slightly, from $1.10 now to $1.13.
For a $57 plate of 24 cans, the tax is $26.40, but would increase to $27.10.
Brewers Association of Australia chief executive John Preston said it was a myth that only spirits drinkers had it worse.
“Almost 50 per cent of the price of a beer block is federal tax, so it’s the same with beer as it is with spirits – if you buy a bottle of spirits, it will last you a lot longer than a beer block,” he told Daily Mail Australia.
Mr Preston said excise duties were contributing to the closure of pubs and clubs, while hospitality venues accounted for 15 per cent of Australian business failures.
“This is just another blow they don’t need,” he said.
‘Pubs and hospitality venues are increasingly struggling to stay afloat. Pub owners say the increase in beer duty means people can no longer afford to come and have a pint.’
Mr Holland said alcohol duty was contributing to Australia’s inflation problems, despite the tax having been indexed twice a year since 1983.
“The federal government’s own data repeatedly shows that rising alcohol taxes are contributing to the persistent inflation problem that the government is trying so hard to tackle,” he said.
Higher ABV drinks attract higher excise duty, which is indexed for inflation every six months. This means vodka drinkers will notice the difference much more than beer drinkers (pictured is a Sydney barman)
But monthly inflation figures for May showed alcohol prices rose 3.4 percent over the year, well below the headline inflation rate of 4 percent.
The quarterly figures from the Australian Bureau of Statistics determine the level of excise duties.
Westpac expects inflation figures for the coming June quarter to show Australian inflation rising at an annual rate of 3.8 percent.
This would be worse than the 3.6 percent pace in the first quarter, taking inflation even further above the Reserve Bank’s 2 to 3 percent target.
But Westpac expects alcohol prices to rise by just 0.7 percent in the three months to June.