Senate Committee favours volumetric tax system for alcohol in Australia

Posted by Andrea Hogan on 5th April 2017

The Senate Committee investigating the impact of regulations over Australia’s alcohol industry has released an interim report.

The report which investigates the sale, supply and taxation of alcohol, recommends moving to a single volumetric tax rate across all alcohol products.

A volumetric taxing system would see alcoholic beverages taxed on its alcohol content, rather than the mechanism by which the alcohol is delivered (the current system).

Many inquiry participants argued that Australia should move to a volumetric system.

An Australian Taxation Officer (ATO) representative however argued that they were not sure the industry had a single view on what a volumetric tax system would like.

“Is that a [tax] that applies to wine or is that a volumetrics that applies to all alcohol at a single rate that draws in?” the ATO representative questioned.

“I do not believe that that has been thought through by some of the advocates of a volumetric system. I think they have looked at it in their own patch. You could say: ‘Wine collects X. What would a volumetric rate be to get X? Beer collects Y. What would a volumetric rate be to collect for beer?’ You could split it up or you could go to one,” the ATO representative said.

“Red tape suffocating the industry”

In support of its findings, the Senate Committee quoted the liquor, distiller and importer Diageo Australia:

“Australian distillers and consumers currently pay some of the highest alcohol taxes in the world, while businesses have to decipher a maze of overly-complex bureaucracy which varies significantly across the states,” Diageo Australia said.

The Senate Committee also quoted the Australian Liquor Stores Association which said if there was less regulation, the Australian liquor industry could provide more jobs and that there would be greater business opportunities.

Chief Executive of the Australian Hotels Association, Stephen Ferguson, argued that the heavy taxing of alcohol in Australia as a abuse deterrence method does not always work, citing the ‘alcopops’ tax as an example.

“What that actually did was shift kids from a measured quantity of alcohol in a measured container to the cheaper product which is indiscriminate: buying 1,125 millilitre bottles of spirits instead [and preloading],” Ferguson said. Many inquiry participants argued that Australia should move to a taxation system which taxed alcohol by its alcoholic content rather than the way in which the alcohol is delivered (the current system).

The Senate Committee’s full list of recommendations are as follows:

Recommendation 1

The committee recommends that the Australian Government:

  • provide leadership on the issue of alcohol taxation by establishing clear policy objectives for the taxation of alcohol; and
  • progress the reform of alcohol taxation, including:
    • introduction of a single volumetric tax rate across all alcohol products, to be phased in to allow reasonable adjustment;
    • enactment of legislative changes to enable monthly settlement of alcohol tax liability for big businesses and quarterly settlement of alcohol tax liability for small businesses, with the Australian Taxation Office to be granted discretion to further extend settlement periods based on trading terms.

Recommendation 2

The committee recommends that the Australian Taxation Office move toward the provision of online services as expeditiously as possible, to facilitate applications for manufacturer and storage licences, as well as movement permissions, in respect of excise equivalent goods.

Recommendation 3 (Reduce Red Tape)

The committee recommends that the Australian Government and COAG support the sale and supply of alcohol through consideration and implementation of evidence-based policies that aim to reduce red tape and promote job creation, and business growth and investment, including:

  • recognition of Responsible Service of Alcohol certification acquired interstate, whether through online or face-to-face training;
  • streamlining and simplification of liquor licensing systems to reduce the number and types of licences/permits to a minimum viable level;
  • allowing packaged alcohol to be sold in convenience stores, petrol stations and supermarkets;
  • abolishing restrictions on trading hours for liquor stores;
  • shifting resources toward targeted enforcement of existing regulation, rather than a blanket approach of increased regulation for all licensees;
  • developing liquor licensing fees based on empirical assessments of risk, rather than social perceptions of risk.


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