Al Capone, coming to a suburb near you.

The Federal Government’s policy on excise will see people die from bad alcohol and an emergence of Al Capone style organised crime.

Thanks to a discriminatory and outdated alcohol excise policy, the price of spirits is so outrageously high that criminals will find it just too attractive to make and distribute illegally, undercutting an entire industry. We have seen the same style policy settings deliver criminal activity in the tobacco industry, with record hauls of illegal tobacco, and an epidemic of arson incidents in the tobacco and vape shops on our streets.

Whilst it is very rare to have a death in Australia due to alcohol contaminated with methanol, it is commonplace overseas with notorious cases in the very recent past. Alcohol is very easy to make, and easy to do it so badly that consumers can get seriously ill. The price of spirits excise is currently $104.31 per litre and increasing every six months. The temptation for illegally distilled spirits, whether produced by backyarders for home consumption, or by criminal elements interested in a fast profit, is huge and getting more compelling every six months.

Death of innocent consumers and the death of an inspirational, home grown and innovative craft industry is all but assured if the Federal Government does not take affirmative action and reform the excise regime to be a volumetric one where all alcohol is taxed equally.

None of this is new. Internal Treasury papers going back at least as far as 2010 and various taxation reviews have all recommended the gradual overhaul and introduction of volumetric tax. It is time for action, before some individuals and an industry die.

Australia's current alcohol excise policy, particularly the high tax rates on spirits, has sparked growing concerns about its unintended consequences, including the rise of illegal alcohol production and organized crime. Here are the key points related to this issue:

High Alcohol Excise Rates

The excise on spirits in Australia is $104.31 per litre of alcohol, one of the highest globally, and increases biannually in line with inflation. This rate is significantly higher than in countries like the United States and New Zealand. 1 2 3.

These high taxes make spirits expensive for consumers and create incentives for illegal production and distribution. 6 7.

Black Market Risks

There is evidence of a growing black market for alcohol in Australia. For instance, a recent investigation uncovered a $1 billion bootleg alcohol trade in Victoria, where crime syndicates mixed spirits with industrial chemicals to evade taxes. 7.

Similar patterns were observed in the tobacco industry after significant excise hikes, where illicit trade surged. 6.

Public Health Concerns

Illegally produced alcohol often lacks quality control and can contain harmful substances like methanol, posing severe health risks. While such incidents are rare in Australia, they are common globally and could increase if illegal production grows. 7.

Industry Impact

High excise rates disproportionately affect the spirits industry, stifling growth and innovation. Small distilleries face significant financial strain due to repeated tax hikes. 3 6.

The Australian government has introduced some relief measures, such as increasing the Alcohol Manufacturer’s Remission (AMR) threshold from $350,000 to $400,000 starting July 2026. However, these measures do not address the broader issue of high excise rates on spirits. 1.

Calls for Reform

Experts and industry groups have long advocated for a shift to a volumetric tax system, where all alcoholic beverages are taxed equally based on their alcohol content. This approach could reduce disparities between beverage types and curb black market activity. 5 6.

Treasury reviews dating back to 2010 have recommended such reforms, but no comprehensive changes have been implemented. 4 5.

Without significant reform to Australia's alcohol excise policy, the risks of organized crime, public health crises from unsafe alcohol, and harm to the domestic spirits industry are likely to persist or worsen.

*Image courtesy Wikipedia