Boutique distilleries have sprung up across Australia in recent years, with a particular boom on the Fleurieu and Kangaroo Island in gin and whisky producers.

Federal Member for Mayo Rebekha Sharkie met with Treasurer Josh Frydenberg last week to advocate for a fairer tax regime on Australia’s local craft distillers to be included in the May Budget.

The meeting followed debate in Federal Parliament on a motion calling for a cut in the excise tax rate on spirits, a freeze on indexed tax hikes for three years, and an increase in an excise refund scheme for small distillers in line with what is available to small winemakers.

"Given the impact of COVID-19 on our hospitality industry, it makes practical sense to support our local craft distillers," Rebekha says.

"At present, the government is taxing the lifeblood out of this industry.

“It is simply absurd that our spirits distillers are subjected to the third-highest spirits tax in the world.

“They are taxed four times more than wine and cider producers and twice as much as brewers in Australia.”

Distillers say the tax regimen hurts their competitiveness and ability to grow and create jobs.

One of the biggest issues is distillers have to pay excise to the government well before they are paid for the product.

A winemaker sells product to a wholesaler who is taxed when they on sell.

Modelling commissioned by the industry shows the tax on spirits is now so high it is having an impact on consumer behaviour, with Australians buying fewer local products because of the higher price.

Rebekha said the tax regime on spirits was a legacy from the time when the vast majority of hard liquor was imported from overseas and the government was attempting to establish the local wine and brandy industry.

“We all recognise the importance of the wine sector in regional Australia and the significance the industry has for our international reputation for quality," Rebekha says.

“In recent years, we have witnessed the development of craft breweries and distilleries.

“A decade ago, we did not have a single commercial distillery in Mayo. Today, more than a dozen craft distilleries operate and, like their wine cousins, are among some of the best in the world, producing some of the finest craft gin and whisky on offer.

“There are more than 300 locally owned distilleries across Australia, supporting more than 5,000 direct jobs and a further 15,000 indirect jobs.

“This growth has occurred despite the inequitable application of the spirits excise causing unnecessary financial burdens on hardworking Australians.

“Most people don't realise that, when they go to a winery and at the cellar door they are poured a sample, that sample is excise free—there is no tax paid on that for the producer.

“However, if you go to a gin distillery door, they need to pay excise on that small taste that you have—bottle after bottle.

“That’s in addition to the tax they have to pay upfront for products such as whiskey that has to age in a barrel. Some products are taxed eight times before being sold.

“It is costing our distillers a fortune just to keep the doors open.

“The changes for craft distillers put to Treasurer last week just bring the sector in line with what is available to small winemakers.

“We received a positive hearing from the Treasurer and I remain hopeful that the Government will consider these changes in the context of the 2021/22 Budget in May.”

Image by jacqueline macou from Pixabay