Liquor industry complains about annual `sin tax' rise

The liquor industry is sounding its yearly complaint over a rise in excise tax, which goes up 1.8 per cent today in line with inflation and boosts prices for wine, beer and spirits across the board.

Triggered by the annual Consumer Price Index adjustment, the automatic rise in excise tax - renamed "sin tax" by critics - has already dealt a hefty blow to cigarette tax prices, adding $1 to the price of 20 cigarettes and $3.13 to a pouch of tobacco in early May.

Today's rise has prompted several liquor industry figureheads to forecast production cuts and job losses for sectors of the industry.

They continue to lobby for the complete abolition of excise tax, and will meet Finance Minister Michael Cullen in Auckland next week to put their case.

So far the Government has not signalled any intention to curtail a very strong excise revenue stream. Excluding import duties, excise tax revenue from alcoholic drinks was more than $400 million in 1999. Combined with tobacco and other sources, the Government collects about $700 million a year for its Consolidated Fund through excise tax. Since 1989 the tax has risen by 22 per cent on beer and wine, and by more than 13 per cent on spirits.

The chief executive of the Distilled Spirits Association, Thomas Chin, said $16 of the retail price of a bottle of spirits, which costs about $24, is excise tax. The tax component increased, with the addition of the Alcohol Advisory Council levy and GST, to $18.

The chief executive of the Hospitality Association, Bruce Robertson, said liquor retailers would have no choice but to pass on today's increase, as well as any losses that might result from a decline in consumption.

"Retailers will continue to suffer from this move, and consumers will, too."