Australians are falling in love with homegrown gin, rum and whiskey, but the booming sector says high taxes are leaving a sour taste in the mouths of distillers.
Key points:
- Distillers meet in Bundaberg to fight for spirit tax reform
- Despite a tenfold increase in distilling operations, new investment and job growth stalls
- The government commits to simplifying and streamlining the excise regime
Warning that the existing tax rate on spirits is hobbling the industry, 50 distillers have descended on Bundaberg — Australia’s “home” of distilling — to call for tax reform.
Paul McLeay from the Australian Distillers Association says urgent action is needed, with local distillers paying the third-highest tax rate on spirits in the world.
“The only thing holding us back right now is a very unfair and unsustainable tax system on our spirits,” Mr McLeay said.
“It’s a fast-growing industry. Ten years ago there were 30 distillers in Australia, now there’s 300.
“Consumers are demanding more interesting and innovative products. People are choosing to buy local.”
Distillers have met in Bundaberg to demand spirit tax reform, as Australia’s rate is the third highest in the world.(
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Mr McLeay said the Australian distilling industry was in a similar situation to that of the nation’s wine industry 30 years ago, but it needed even more government help.
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Australia’s alcohol excise code is complicated and the tax on distilled spirits is the highest of any alcohol.
Mr McLeay said the tax on Australian craft spirits was more than double per standard drink on craft beers.
“So, what we are asking is for the government to freeze the rate for two years,” he said.
“Two-thirds of our distilleries are in rural and regional areas, so any changes would mean more jobs.”
$24 of tax per bottle
When Rick Prosser from the Bundaberg-based distiller, Kalki Moon, sells a bottle of gin, he uses it to educate the customer about his plight.
“It’s a huge tax. People will question the cost of a bottle of gin, but there’s $24.50 excise tax in a standard bottle and GST on top of that,” he said.
Producers like Mr Prosser want the tax reduced or frozen, saying local distillers are paying the third-highest tax in the world.
The Australian Distillers Association says there are more than 300 distilleries nation-wide, up from just 30 a decade ago.(
ABC News: Shelley Lloyd
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Matt Hobson from Sunshine Coast-based distiller Sunshine & Sons started distillation in early 2020.
But he said his business had already slammed on the brakes and would not employ new staff until there was relief.
“We’ve got a well-considered proposal and we can give more power to regional tourism, but we need help,” he said.
“Imagine what we could do with some modest relief.”
Will the government shout?
In a statement, Federal Treasurer Josh Frydenberg said a decision to extend the excise refund scheme to distillers from July 1, 2017, meant eligible manufacturers of alcoholic beverages could claim a refund of 60 per cent of the excise duty paid on the products.
Late last year, the Federal Government announced that simplifying and streamlining the excise regime would be a new priority area for the Deregulation Taskforce.
The government also maintained it had fast-tracked the reduction of the company tax rate to 25 per cent by 2021-22 for small and medium sized businesses (SMEs) with a turnover below $50 million.
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