A spate of fire bombings could be just the beginning as concerns mount the tax system is driving a burgeoning alcohol black market putting lives and the budget bottom line at risk.
Police have not confirmed whether illicit alcohol was behind 15 incidents at hospitality venues across inner Melbourne since April 14, but the industry is warning Australia's high excise settings is fuelling organised crime.
Left unchecked, the nation could face a second black market scourge, after the explosion in illicit tobacco that has decimated the federal budget's excise take and spurred gang violence.
The experience of the tobacco market was a "cautionary tale", industry body Spirits and Cocktails Australia chief executive Steven Fanner told AAP.
High excise rates equate to more than $30 on a standard 700ml bottle of spirits.
Mr Fanner warns the excise is interacting with the alcohol manufacturers remission scheme - a tax break intended to support craft distillers by allowing small manufacturers to produce their first 8500 litres or so excise-free - to do more harm than good.
The system is being gamed by dodgy operators and opportunistic middlemen, who are exploiting the scheme to buy up tax-free alcohol and undercut genuine manufacturers.
Spirits and Cocktails Australia and the Australian Distiller's Association have written to the treasurer outlining their concerns over the scheme and calling for stronger integrity measures to ensure it isn't exploited by bad actors.
They estimate tightening the scheme could save the federal budget about $224 million over four years.
Last November, the Australian Taxation Office estimated illicit alcohol sales were worth at least $767 million, which was more than 10 per cent of all spirits consumed legally in Australia, said the National Drug Research Institute.
A spokesperson for Assistant Treasurer Daniel Mulino said the alcohol remission scheme 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 is doing the wrong thing," the spokesperson said in a statement.
Police were aware alcohol could also be coming into the nation without being taxed, said Victoria Police Detective Superintendent Jason Kelly, although it wasn't clear whether the attacks were the beginning of an illegal alcohol trade war.
"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 employing the same techniques used in the state's long-running tobacco turf war.
Nationals MP Pat Conaghan wants a review of the alcohol excise, which he says is unsustainable for operators and drives consumers to the black market.
As a former undercover drug operative, he believes enforcement agencies are severely under-resourced and penalties are far too low to act as a deterrent.
Public health is also at stake.
Bootleg liquor 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 cautions it's too late to eradicate the tobacco black market by simply cutting the excise without increasing enforcement.
While Mr Richardson estimates the tobacco tax take is $15 billion a year less than it would be without the black market, Mr Conaghan warns a similar situation in the alcohol market would cut government revenue by double that figure.
Mr Conaghan says there is still time to "break the back" of the illicit alcohol networks before they become entrenched.
"If we don't get on top of it now, it will turn into the same kind of monster that tobacco is," he said.
