‘Alcopops tax cuts jobs, not drinking’, fear Independent Distillers

Posted by Janice Wong on 5th June 2009

Alcohol beverage distributor and manufacturer Independent Distillers fear the introduction of alcopops tax will cut jobs, not drinking. If new excise measures are passed by the Senate, this could mean the closure of its factory in Laverton – a loss of 135 jobs, and potentially a further 150 among suppliers and customers. It could also mean the company may have to consider moving operations overseas.

Since the 70 per cent tax on ready-to-drink alcoholic beverages was introduced in April 2008 as a trial, the company has seen a 30 per cent decline in sales, and 23 jobs lost, with more pending.

The company agrees that binge drinking is a problem in Australian society that needs to be tackled, but believes that singling out ready-to-drink products is rather a “political quick fix” than a “real strategy to change drinking culture”.

“Imposing a punitive tax on one form of alcoholic drink will not stop young people binge drinking – it will just encourage them to buy different alcoholic products,” the company said.

The Australian Government’s own Budget documents prepared by Treasury show that the Government expects drink substitution. For example, “Beer excise is expected to grow by 8.0 per cent in 2008‑09, with higher volumes likely to be reflecting some substitution away from ready‑to‑drink (RTD) beverages.”

“In the same period, the consumption of full strength spirits rose by 18 per cent and that of beer by 5 per cent, suggesting some substitution from RTDs to other alcoholic beverages,” reported the Treasury.

Indepent Distillers also argues that people who are not binge drinkers and not young will be affected by the tax. The largest selling “alcopops” is premixed bourbon and cola – almost universally consumed in moderate quantities by 30+ aged males who prefer not to purchase whole bottles of spirits.

Peter Murphy, Chief Executive Officer of the company said he would continue to battle for his workers, which meant lobbying the Federal Senate to ensure it voted against the tax.

The bill had been blocked in March by the Senate, and now the Federal Government plans to reintroduce the tax legislation into Parliament after June 18.

Mr Murphy said that it is likely that their factory will be force to close, but he would push forward.

“I’m taking an optimistic view,” he said.