Bootlegger boom: big excise fuels black market booze
A series of incendiary bombs could be just the beginning, amid concerns the tax system is leading to a growing alcohol black market, putting lives and finances at risk.
Police have not confirmed whether illicit alcohol was behind 15 incidents at inner-Melbourne hospitality venues since April 14, but the industry warns Australia’s high excise regulations are fueling organized crime.
If left unchecked, the country could face a second black market scourge following the illegal tobacco boom that has decimated the federal budget’s excise tax and encouraged gang violence.
Steven Fanner, chief executive of industry body Spirits and Cocktails Australia, told AAP the tobacco market experience was a “cautionary tale”.
High consumption rates equate to more than $30 for a standard 700ml bottle of spirits.
Mr Fanner warns that excise duty interacts with alcohol producers’ rebate scheme; A tax break aimed at supporting craft distillers by allowing small producers to produce the first 8,500 liters exempt from consumption is doing more harm than good.
The system is gamed by cunning operators and opportunistic middlemen who exploit this scheme to buy alcohol tax-free and undercut the price from real producers.
Spirits and Cocktails Australia and the Australian Distilleries Association have written to the treasurer expressing their concerns about the scheme and called for stronger integrity measures to ensure it is not exploited by bad actors.
They estimate that tightening the plan could save the federal budget about $224 million over four years.
The National Drug Research Institute said the Australian Taxation Office estimated illegal alcohol sales last November were worth at least $767 million, accounting for more than 10 per cent of all alcohol consumed legally in Australia.
A spokesman for Deputy Treasurer Daniel Mulino said the alcohol reduction plan was about supporting Australian distillers.
“We take integrity very seriously. The ATO is responsible for compliance and we expect them to crack down on anyone who does the wrong thing,” the spokesman said in a statement.
Victoria Police Detective Superintendent Jason Kelly said police were aware alcohol could enter the country without being taxed, but it was unclear whether the attacks were the start of a war on the illegal alcohol trade.
“That’s the million-dollar question,” he told reporters on Tuesday.
“Everything is on the table.”
But Det Supt Kelly suggested unknown crime figures were using the same techniques used in the state’s long-running tobacco plantation war.
Nationals MP Pat Conaghan wants a review of alcohol duty, which he says is unsustainable for operators and drives consumers into the black market.
As a former undercover drug agent, he believes enforcement agencies are severely under-resourced and penalties are too low to be a deterrent.
Public health is also at risk.
Moonshine increases the risk of methanol poisoning and Mr Conaghan warns the deaths of teenage backpackers Bianca Jones and Holly Bowles in Laos could be repeated on Australian shores.
Economist Chris Richardson warns that it is too late to eliminate the tobacco black market by simply cutting excise taxes without increasing enforcement.
Mr Richardson estimates that tobacco duty would be $15 billion less a year without the black market, while Mr Conaghan warns that a similar situation in the alcohol market would increase government revenues by double that figure.
Mr Conaghan says there is still time to “break the back” of illicit alcohol networks before they take root.
“If we don’t tackle this now, it will become the same kind of monster as tobacco,” he said.
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