Aussie Product Tax Hike: Australians are bracing for another round of price increases as the government’s biannual alcohol tax adjustment takes effect. The excise tax on alcoholic beverages is linked to the Consumer Price Index (CPI) and is automatically updated every six months. This consistent rise in taxation has led to growing frustration within the brewing and hospitality industries, as well as among consumers.
With inflation already driving up costs in other sectors, the continuous increase in alcohol taxes is making a night out or even a simple drink at home significantly more expensive. The industry is warning that this could have lasting negative effects, including job losses and reduced consumer spending. Many businesses are struggling to absorb the costs, while others are left with no choice but to pass them on to consumers.
This article takes an in-depth look at the Aussie Product Tax Hike, explaining how the excise system works, the impact on businesses and consumers, how Australia compares to other countries, and why industry leaders are calling for a major reform.
Overview of the Aussie Product Tax Hike
| Category | Details |
| Product Affected | Alcoholic beverages, including beer, spirits, and pub drinks |
| Reason for Increase | Biannual tax adjustment linked to CPI |
| Current Tax Rates | Spirits: $103.89 per litre of pure alcohol, Beer: $61.32 per litre of pure alcohol |
| Impact on Prices | Higher costs for brewers, retailers, and consumers |
| Industry Concerns | Sustainability, impact on tourism, job losses |
| Global Comparison | Australia has the third-highest beer tax and one of the highest spirit taxes in the world |
| Proposed Industry Changes | A freeze on excise tax and a review of the taxation system |
How Alcohol Excise Tax Works in Australia
Australia’s alcohol taxation system is unique in that it automatically increases twice a year in line with inflation. Unlike some other countries where alcohol taxes are adjusted through legislation, Australia’s system is designed to increase the government’s revenue without requiring political debate or approval for each adjustment.
The tax applies differently depending on:
- The type of alcohol
- The alcohol percentage
- The size and packaging of the product
For example, the tax rates as of 2025 are:
- Beer (over 3% alcohol, less than 8 litres per container): $61.32 per litre of pure alcohol
- Beer sold in pubs (over 3.5% alcohol): $43.22 per litre of pure alcohol
- Spirits (over 10% alcohol): $103.89 per litre of pure alcohol
To put this into perspective, a 1-litre bottle of Bundaberg Rum that retails for $61.50 includes $38.40 in taxes. Similarly, 60% of the price of a packaged full-strength beer goes directly to tax.
Impact on the Brewing and Hospitality Industries
Rising Costs for Businesses
Brewers, pub owners, and bottle shop operators are facing increasing financial pressure due to the constant rise in excise taxes. Many small and independent breweries have stated that they cannot keep absorbing these costs indefinitely.
Mike Clarke, founder of Sauce Brewing Co., explained that tax increases are just one part of a broader cost crisis. “You’ve got excise going up every six months, plus other costs like wages, transport, and electricity. Customers are already stretched, so it’s not realistic to keep raising prices.”
Other breweries, such as Dad & Dave’s Brewing, have decided to absorb the tax increases rather than pass them on to customers. However, this is not a sustainable long-term strategy, as profit margins continue to shrink.
Operations manager Joel Meaney pointed out that if every cost increase were passed on, “what used to cost $10 would now be $14.” He added that customers simply cannot afford to pay that much, forcing businesses to take financial hits instead.
Consumer Impact – A Night Out Becomes a Luxury
For many Australians, enjoying a drink at a bar or purchasing alcohol from a retailer is becoming an increasingly costly decision. As wages fail to keep up with inflation, many consumers are cutting back on non-essential spending, and alcohol is no exception.
Amanda Lampe, chair of Bundaberg Distilling Co., noted that alcohol prices are making Australia less competitive for tourists. “Tourism is critical to our economy, but when visitors see the high cost of food and beverages here, they may choose other destinations,” she said.
The combination of higher prices, an ongoing cost-of-living crisis, and declining disposable income means that many Australians are rethinking how often they purchase alcohol, which could have ripple effects on the hospitality and retail industries.
Australia’s Alcohol Tax Compared to Other Countries
Australia has some of the highest alcohol taxes in the world.
- Beer Taxes: Australia ranks third highest globally, with only Norway and Finland having higher excise duties.
- Spirit Taxes: Australia’s excise duty on spirits is seven times higher than in the United States.
- Comparison to New Zealand: New Zealand’s excise tax on spirits is $61.21 per litre of pure alcohol, significantly lower than Australia’s rate of $103.89 per litre.
The global comparison makes it clear why the Australian alcohol industry is demanding change. Many argue that taxes should be adjusted to better align with international rates, making alcohol more affordable for both locals and tourists.
Industry Push for a Tax Freeze
With growing concerns over the sustainability of Australia’s alcohol taxation model, key industry figures are calling for a major reform.
1. Freezing Tax Increases
One of the most immediate proposals is a temporary freeze on excise tax hikes. This would allow businesses to recover from economic pressures without the added burden of rising tax costs.
2. Reviewing the Taxation Model
Many industry leaders believe that the automatic CPI-linked tax increases are outdated and need to be revised. Instead of semi-annual increases, they propose a more stable system where tax adjustments are debated and legislated based on economic conditions.
3. Tax Breaks for Small Brewers and Pubs
Independent breweries and small pub operators are among the hardest hit by tax increases. Some industry leaders suggest that smaller businesses should receive tax relief to keep them competitive against larger alcohol corporations.
4. Aligning with International Standards
Bringing Australia’s alcohol tax system more in line with global standards would make the industry more competitive, help support tourism, and prevent local businesses from suffering under excessive taxation.
While the government has not yet committed to any changes, the pressure to reform the system is growing louder.
Frequently Asked Questions (FAQs)
Why does alcohol tax increase in Australia?
Alcohol excise duty is linked to the Consumer Price Index (CPI) and is adjusted automatically every February and August to account for inflation.
What is the current tax rate on spirits?
The excise tax on spirits is $103.89 per litre of pure alcohol, making it one of the highest in the world.
How much of a beer’s price is tax?
Approximately 60% of the retail price of a packaged full-strength beer is due to excise tax.
Which countries have higher beer taxes than Australia?
Only Norway and Finland have higher beer excise taxes than Australia.
What changes is the industry requesting?
Industry leaders are asking the government to freeze excise tax increases and review the system to create a fairer and more sustainable structure.
Conclusion
The latest Aussie Product Tax Hike is placing significant strain on businesses and consumers alike. While the government’s goal is to increase tax revenue and regulate alcohol consumption, many argue that the current system is unsustainable.
With industry leaders, business owners, and consumers calling for a freeze on excise tax increases, the debate over Australia’s alcohol taxation system is heating up. Whether the government will respond with meaningful reforms remains to be seen, but for now, the cost of alcohol in Australia continues to climb.