Australian Whisky keeps gaining momentum, with new distilleries opening and the current producers continuing to expand and develop their product. The one constant in the market is that before a bottle ever hits the shelf a significant amount of its value is taken from the producers as tax. Like all taxes the excise on alcohol is complicated, so let me try to lay it out for you lay-mans terms.
There are a few types of alcohol taxes out there. There is the Wine Equalisation System (WET). There is an excise rate for beverages that are under 10% alcohol by volume, products such as beer, and then there is the excise for products with an alcohol content over 10%, like the whisky we love.
In a nut shell, for every litre of pure alcohol, $85.36 is owed in tax. This means for a 700ml bottle of whisky that is 40% ABV you will pay $23.90.
To work out the formula we need to break down the alcohol cost. We do this by dividing the $85.36 excise by the 1000ml in a litre ($0.08536 per ml). Then break down the volume of pure alcohol contained in the bottle. In this case that would be done by multiplying 700ml x 40% (280ml). To get our final tax cost we multiply 280ml x $0.08536 per ml = $23.90 in tax per bottle. This is all before you add on GST.
Like all things in this world the excise rate does not stay the same. Twice a year (generally the 1st February and the 1st August) the increases by the Consumer Price Index (CPI) rate at that time. In Feb 2019 the rate went up from $84.51 to $85.36, with a CPI rate of 1.010.
So, the next time you are out looking for a bottle and think ‘Christ, that seems expensive’, spare a thought for the Australian Craft Distillers. Out of that $100 bottle, the distiller had to pay nearly 25% of its value to the government. And that is merely excise tax alone.