For 2022–23, we estimate that around 90.4% or $7.5 billion of the expected alcohol duty will be collected. This leaves a tax gap of 9.6%, or $798 million. Around $709 million or 88.8% of the unreported alcohol duty is because of illicit activity in the shadow economy.
The latest estimate is 0.5 percentage points higher than the previous year. In the 5 years before this year, the Alcohol tax gap has remained steady, at around 9%, even with an increase in market participants, duty rate increases, and an increase in the duty collected.
|
Element |
2017–18 |
2018–19 |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
|---|---|---|---|---|---|---|
|
Population |
7,103 |
7,993 |
10,218 |
12,150 |
11,833 |
11,368 |
|
Gross gap ($m) |
689 |
720 |
662 |
695 |
747 |
800 |
|
Amendments ($m) |
153 |
162 |
64 |
2 |
2 |
2 |
|
Net gap ($m) |
536 |
558 |
597 |
693 |
745 |
798 |
|
Expected collections ($m) |
5,534 |
5,798 |
6,007 |
7,004 |
7,435 |
7,550 |
|
Theoretical liability ($m) |
6,070 |
6,356 |
6,604 |
7,697 |
8,180 |
8,348 |
|
Gross gap (%) |
11.4% |
11.3% |
10.0% |
9.0% |
9.1% |
9.6% |
|
Net gap (%) |
8.8% |
8.8% |
9.0% |
9.0% |
9.1% |
9.6% |
Figure 1: Net tax gap (percentage) – Alcohol tax gap, 2017–18 to 2022–23
Our analysis finds the key driver of the Alcohol tax gap is illicit alcohol activity.
There are a number of known illicit alcohol activities and arrangements that have been identified. These include:
- unauthorised manufacture and unpaid excise duty
- authorised manufacture with under-reported or unpaid excise duty
- product diversion
- cross-border transactions (smuggling or export diversion)
- deliberate fraud or evasion.