Diageo has launched a campaign with its Bundaberg Rum brand against the Australian Tax Office’s current excise duty on spirits. Bundaberg Rum is currently taxed at 63 per cent per litre.
The campaign comes on the eve of the Australian Bureau of Statistics (ABS) publishing the latest consumer price index (CPI), which provides the basis for indexation, on 1 February. The ABS publishes the update twice a year on 1 February and 1 August.
“Australia’s spirits tax is currently the third highest in the world, behind only Iceland and Norway. The spirits industry alone will pay about $5 billion in excise this year in Australia, and this tax continues to grow twice a year, every year,” Diageo said.
In August last year, the tax on spirits crossed the $100 per litre threshold, and Diageo expects it to rise after the February announcement.
Bundaberg Distilling Co chair Amanda Lampe said, “We’ve been talking to Bundaberg Rum customers… and we know many of them are doing it tough. They know alcohol should be taxed, but a 63 per cent tax on a 1 litre bottle of Bundy UP just seems outrageous.”
Australian Distillers Association chief executive Paul McLeay said the excise was felt keenly across Australia’s 600 spirits distilleries.
Co-founder and CEO of Cape Byron Distillery, Eddie Brook, said, “This spirit tax is driving inflation, significantly increasing the cost of spirits and Beer at the bar/bottle shop while strangling small businesses by reducing their margin every six months.”
In September last year, following the August CPI figures and excise increase, Brook released a new on-premise Excise Strength Gin in a bid to create momentum for change on what he said was an “unsustainable and archaic excise system”.
“It has been brilliant to see this campaign go live from Bundaberg and the Australian Distillers Association is in full support,” Brook said.
Lampe added, “We do our best to make our products as affordable as possible for our customers, as we grapple with increases in energy, raw material and freight costs, but the way we’re taxed makes this a real challenge.
“We know this isn’t a problem that the current Federal Government created, but today we’re asking them to help fix it by freezing the excise on spirits, because the tax on Bundy is frankly too much to bear.”
McLeay supported Bundaberg in its campaign that is running of billboards, radio and social advertisements in a bid to urge the federal government to freeze the twice-yearly increases to the spirits tax rate.
“It’s great to see an iconic brand like Bundaberg Rum stand up and say this tax has gotten out of hand, because it’s also wreaking havoc on the hundreds of small, emerging distilleries we have right around the country,” McLeay said.
The formula for spirits and other excisable beverages is the total volume (litres) of product x alcohol strength x current excise duty rate.
The excise duty rate is set per litre of alcohol (LAL) for alcoholic products.
There are also other factors that influence the final price of spirits and other alcoholic beverages including the GST and wholesale and retail mark-ups.
