The latest excise tax increase for spirits – including whisky – will take effect Monday 5 August in the next consumer price index (CPI) increase.
CPI is a measure of changes in retail prices paid over time and is used to measure inflation or deflation. It is recorded twice annually and a growing CPI results in a rise in excise applicable across all alcohol categories.
The indexation factor for alcohol in the most recent period is 1.006 and as a result from 5 August the excise rates for spirits will be $85.87 per litre of alcohol, up 51 cents from $85.36 at the last increase 4 February.
In real terms a 700ml bottle of whisky at 40% will now attract $24.04 in excise tax and a 700ml bottle at 55% will now attract $33.06.
The twice-yearly increases are no surprise to Australian producers, importers, distributors or retailers, who will either choose to absorb various increases or nudge prices up at regular intervals. Most will set a price in anticipation of a year or two of increases to avoid regular market fluctuations. Immediate price changes are not expected following Monday’s increase.
Although the CPI increase affects all alcohol, spirits are taxed far higher than other categories. In comparison, a beer over 3% will now attract $50.70 excise per litre of alcohol.
Australia notoriously has one of the steepest spirits excises in the world, which impacts both domestic products being released from bonded warehouses and imported products clearing customs. It has prompted industry lobby association Spirits & Cocktails Australia to launch the Freeze The Spirits Super Tax petition. The Australian Distillers Association are also active in working with government bodies for relief.