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Excise Tax on Alcohol Capped After Outcry

There has been a huge win for the beer, wine, and spirits industries. The 2023 federal budget has introduced a significant change, rather than the planned 6.3% increase, the rise in excise duties on all alcoholic products will be temporarily capped at 2% beginning next month.

The budget states that “This proposal temporarily caps the inflation adjustment for excise duties on all alcoholic products at 2% for one year only as of April 1, 2023.” This adjustment was introduced following opposition from microbrewers and distillers, who claimed that the higher excise tax would impact their bottom lines, which are already suffering due to the increased cost of ingredients, manufacturing, and other expenses.

Earlier this month, opposition parties called on the government to scrap the increase entirely, calling it the largest tax hike on alcohol in the last four decades.

Alcohol excise duties are automatically indexed to inflation at the start of each fiscal year, hence the planned 6.3 per cent rise this year. The two per cent cap is just for the 2023-24 fiscal year, the government says. After that, it’s possible that inflation will have fallen, meaning the excise tax won’t be as punishing.

The government expects to make $100 million in 2023-24 from the excise tax, the documents show.

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