The peak body representing spirits producers in Australia has called for urgent action in the wake of alarming evidence of illicit alcohol being sold openly in Melbourne bottleshops.
“The prevalence of contaminated spirits identified in published research is absolutely unacceptable in a country such as Australia, which has always had high standards for food and beverage products underpinned by a strong regulatory framework”, said Spirits & Cocktails Australia Executive Director, Steven Fanner.
The researchers found spirits contaminated with substances indicating the products were not produced in compliance with the Food Standards Code. Of particular concern are findings of alcohol for sale containing levels of methanol well above allowable levels.
“This situation cannot be allowed to continue. We are calling on the Federal Government to urgently review the tax settings that are creating the incentives for illicit trade in alcohol. We have a narrow window of opportunity to correct the course in spirits before it follows the same path we have seen in tobacco, where the illicit market now dominates”, Mr Fanner said.
Australia has the highest spirits tax in the world, outside of Scandinavia, and it will rise again in August to over $110 per litre of pure alcohol. SCA has been voicing concerns Australia’s high excise rate, equating to more than $30 on a standard 700mL bottle of spirits is accelerating demand for cheaper, illicit products.
“Despite having some of the highest spirits taxes anywhere in the world, Australia is seeing more and more tax-free alcohol being sold to retail outlets at very low prices, undercutting legitimate producers.”
The broader sector has consistently warned government that Australia’s high tax rates, combined with loose controls around alcohol producer tax breaks, are now creating an environment that risks incentivising demand for tax-free alcohol and opportunistic behaviour.
The Alcohol Manufacturers Remission Scheme, administered by the ATO, is intended to support craft distillers and brewers to grow, create regional jobs, and support Australian manufacturing and tourism. Under the scheme there is no excise payable on roughly the first 9,000 litres of spirits sold.
“The combination of very high taxes and loosely controlled loopholes are creating the incentives for cheap, illicit alternatives including those potentially unsafe for consumption. We are calling for an urgent review to ensure our tax settings are not distorting the market.”
Contact:
Steven Fanner
Executive Director
Spirits & Cocktails Australia
0402 913 603
