Australians fall in love with local gin, rum and whiskey, but the booming sector says high taxes leave a sour taste in distilleries’ mouths.
Important points:
- The distilleries meet in Bundaberg to fight for a reform of the liquor tax
- Despite a tenfold increase in the number of distilleries, new investments and job growth stand still
- The government is committed to simplifying and streamlining the excise tax system
Warning that the current spirits tax rate is hindering the industry, 50 distilleries have come to Bundaberg – Australia’s “home” of distilling – to demand tax reform.
Paul McLeay of the Australian Distillers Association says urgent action is needed as local distillers pay 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 for our spirits,” said McLeay.
“It’s a fast growing industry. Ten years ago there were 30 distilleries in Australia, now there are 300.
“Consumers are demanding more interesting and innovative products. People are choosing to buy local products.”
Distilleries have met in Bundaberg to call for spirits tax reform as Australia’s tax rate is the third highest in the world. (
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Mr McLeay said the Australian distillation industry is in a similar position to the country’s wine industry 30 years ago, but still needs more government help.
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The Australian alcohol excise code is complicated and the tax on distilled spirits is the highest of all alcohols.
Mr McLeay said the tax on Australian craft spirits is more than double that of standard beverages for craft beers.
“So we are demanding that the government freeze the interest rate for two years,” he said.
“Two thirds of our distilleries are in rural and regional areas, so changes would mean more jobs.”
$ 24 tax per bottle
When Rick Prosser from the Bundaberg-based distillery Kalki Moon sold a bottle of gin, he used it to inform the customer about his plight.
“It’s a huge tax. People are going to question the cost of a bottle of gin, but there’s an excise tax of $ 24.50 on a standard bottle plus GST,” he said.
Producers like Mr Prosser want the tax lowered or frozen, saying local distillers pay the third highest tax in the world.
The Australian Distillers Association says there are more than 300 distilleries nationwide, up from just 30 a decade ago. (
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Matt Hobson of Sunshine Coast distiller Sunshine & Sons started distilling in early 2020.
But he said his business had already hit the brakes and would not hire new staff until there was relief.
“We have 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 modest relief.”
Will the government scream?
In a statement, Federal Treasurer Josh Frydenberg said a decision to extend the excise tax refund system to distilleries from July 1, 2017 would mean that eligible alcoholic beverage manufacturers could claim a refund of 60 percent of the excise tax paid on their products.
At the end of last year, the German government announced that the simplification and streamlining of the excise tax system would be a new priority area of the deregulation task force.
The government also claimed it had accelerated the corporate tax rate cut to 25 percent by 2021-22 for small and medium-sized enterprises (SMEs) with sales less than $ 50 million.
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