A new tax will see the prices of spirits rise, sending costs over an unwelcome milestone.
Spirits Industry Seeks Government Aid Amidst Tax Woes
The Australian spirits industry is currently facing significant challenges due to the increasing taxes imposed on their products. The tax on spirits is projected to exceed $100 per litre, prompting industry leaders to call for a freeze on bi-annual tax increases.
The anticipated price milestone is expected to be reached sooner than initially predicted, with the next tax hike scheduled for August. Last year alone, there was a record 4.1% increase in tax, followed by an additional 3.7% rise in February.
This tax burden has become increasingly burdensome for manufacturers, with more than 60% of the cost of Bundaberg Rum being attributed to taxes. Furthermore, the industry is grappling with recent price hikes in power, raw materials, and freight costs.
In light of these challenges, the Australian Distillers Association CEO is urging the government to provide support to the industry, as the current excise increases are exacerbating economic difficulties and discouraging producers from investing in and expanding their businesses.
Key Takeaways
- Spirits manufacturers and distillers are pleading for government support in light of the upcoming tax increase on spirits, which is set to exceed $100 per litre.
- Producers are calling for a freeze on bi-annual tax increases and expressing concerns that the price will reach the $100 milestone earlier than anticipated.
- The excise tax on spirits increases every six months, with a record 4.1% jump in tax last year and a 3.7% increase in tax in February.
- The unsustainable excise increases, coupled with recent price hikes in power, raw materials, and freight costs, are posing significant economic challenges for distillers and disincentivizing them from investing and growing their businesses.
Tax Impact
The spirits industry is experiencing the burden of escalating taxes, with the country’s tax on spirits expected to surpass $100 per litre. This has led producers to advocate for a freeze on bi-annual tax increases. The price of spirits is anticipated to reach the $100 milestone earlier than anticipated, as the excise tax on spirits increases every six months.
Last year, there was a record 4.1% jump in tax, followed by a 3.7% increase in February. The upcoming tax increase in August will further raise the tax to over $100 per litre.
This tax burden is particularly significant for producers, as more than 60% of the cost of popular spirits like Bundaberg Rum goes towards tax. The managing director of Diageo Australia has described the current tax regime as unbearable, stating that it disincentivizes producers from investing and growing their businesses. These unsustainable excise increases compound the economic challenges faced by distillers.
Industry Challenges
Businesses in the spirits sector are grappling with recent price increases in power, raw materials, and freight costs. These challenges have compounded the economic difficulties faced by distillers in Australia.
The Australian Distillers Association CEO has called for government support in light of these industry-wide challenges. The burden of the excise tax on spirits, which is set to exceed $100 per litre, has also added to the strain on producers. More than 60% of the cost of spirits such as Bundaberg Rum goes towards taxes.
This unsustainable excise regime has disincentivized producers from investing and growing their businesses. Distillers are finding it increasingly difficult to cope with the rising costs of production, making it crucial for the government to provide assistance to the spirits industry to ensure its sustainability and growth.
Government Support
Distillers in Australia are in need of support from the government to address the challenges they face. The industry has been grappling with a series of price hikes in power, raw materials, and freight costs, which have put additional strain on their operations.
The Australian Distillers Association CEO has urged the government to provide assistance to the industry in order to alleviate these burdens. The current excise regime, with its bi-annual tax increases, has been particularly detrimental to distillers. The impending tax hike in August, which will bring the tax on spirits to over $100 per litre, has further intensified concerns.
These unsustainable excise increases disincentivize producers from investing and expanding their businesses, compounding the economic challenges they already face. Government support is crucial in order to ensure the long-term viability and growth of the spirits industry in Australia.
Conclusion
In conclusion, the spirits industry in Australia is facing significant challenges due to increasing taxes, with the tax on spirits set to exceed $100 per litre. Producers are calling for a freeze on bi-annual tax increases to alleviate the burden.
The industry is also grappling with price hikes in power, raw materials, and freight costs.
The Australian Distillers Association CEO is urging the government to provide support to the industry, as the unsustainable excise increases are hindering growth and investment.
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