For 2019–20, we estimate that around 91% or $6 billion of the alcohol duty was reported as expected. This leaves a tax gap of 9.4%, or $629 million. Around $577 million or 92% of the unreported alcohol duty is because of illicit activity in the shadow economy.
The alcohol tax net gap trend is steady at around 9% for the last 5 years.
Element |
2015–2016 |
2016–17 |
2017–18 |
2018–19 |
2019–20 |
|---|---|---|---|---|---|
Population |
5,267 |
5,434 |
7,358 |
8,227 |
9,322 |
Gross gap ($m) |
552 |
557 |
627 |
657 |
649 |
Amendments ($m) |
3 |
4 |
47 |
55 |
20 |
Net gap ($m) |
549 |
552 |
580 |
603 |
629 |
Tax paid ($m) |
5,371 |
5,364 |
5,629 |
5,893 |
6,062 |
Theoretical liability ($m) |
5,920 |
5,916 |
6,209 |
6,496 |
6,691 |
Gross gap (%) |
9.3 |
9.4 |
10.1 |
10.1 |
9.7 |
Net gap (%) |
9.3 |
9.3 |
9.3 |
9.3 |
9.4 |
Figure 1 displays the same information as a percentage.
Figure 1: Net tax gap (percentage) – alcohol tax gap, 2015–16 to 2019–20
Our analysis finds the key driver of the alcohol tax gap is illicit 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 underreported or unpaid excise duty
- product diversion
- cross-border transactions (smuggling or export diversion)
- deliberate fraud or evasion.