How is it that alcohol is so expensive in Australia? Is it just because of taxation?
Why is alcohol so expensive in Australia?
It is mostly due to taxation. But not all of it is.
The World Health Organisation’s latest Global Alcohol Report put Australia in the second-highest band of alcohol consumption: total per capita consumption is between 10 and 12.4 litres of pure alcohol a year.
According to the Australian Hotels Association, around 20 per cent of the cost of beer at the pub is made up of tax.
Regardless of whether you think we pay too much or too little, Australia’s current alcohol taxation system is, put simply, a complete mess.
It’s a hodge podge cobbled together over 30 years of deals, dodges and industry favours.
Case in point: commercially produced beer today is taxed at no fewer than eight different rates, depending on a range of factors including alcohol volume and the type of packaging.
Meanwhile, wine is taxed not on alcohol content but sales value, meaning the cheaper the wine, the less it is taxed.
At the moment, there are broadly three different federal taxes that apply to alcohol:
• Excise, indexed twice annually in line with the Consumer Price Index
• The Wine Equalisation Tax (WET), which is based on sales value
• Customs duties — a combination of alcohol content and sales value
There is also the flat 10 per cent GST on all retail alcohol sales.
The automatic indexation was introduced by the Hawke Government 30 years ago as a way of avoiding negative headlines every budget.
At current taxation levels, drinkers pay 45c for every 1 standard drink in a full-strength beer. For spirits, which are taxed the highest, it’s an extra $1 per standard drink — a mark it hit for the first time this August. - Why do we pay so much for alcohol?
To this one can add the production price, distribution prices, markup prices at alcohol outlet stores and import costs when applicable (transportation and import duties).