Australian spirit makers call for tax breaks to compete with imported labels

Australian hard liquor producers are calling for a tax break to help them compete with cheaper, mass-produced spirits from overseas.

Kimberley distiller Spike Dessert says high tax rates put local spirit producers at a disadvantage. (ABC Open)

The number of Australian distilleries has doubled in the past two years.

But producers of spirits like rum and whiskey are paying a much higher tax rate than vineyards or beer breweries, and the Australian Distillers Association's Stuart Gregor wants that to change.

"In laymen's terms, the taxation regime on alcohol in Australia is a dog's breakfast," Mr Gregor said.

"It is so complicated as to be patently ridiculous.

"It needs reform and we are hopeful that reform might be coming."

Alcohol taxes generate around $6 billion annually for the Federal Government, but even Treasury has conceded the current system is complicated.

A series of different excise rates and rebates apply to different types of alcoholic drinks.

The result is that a standard measure of spirits is taxed at $1, whereas a standard size measure of beer attracts just four cents in tax.

In its submission to the Federal Government's taxation White Paper, the Distillers Association has appealed for a single volumetric taxation rate for all alcoholic drinks.

Mr Gregor, who runs a gin distillery near Sydney, said the Association was also seeking a tax rebate similar to that given to wine and beer makers.

"We would like to get the first $300,000 dollars of excise paid given back to the distillers, so they can reinvest it," he said.

"Maybe in an export drive, maybe into local tourism, or maybe just their own profits and reinvesting in their businesses."

A spokesman for Treasury said alcohol tax rates were being considered as part of the White Paper, but would not be drawn on what changes may be recommended.

Remote distillers struggling to compete

The distillery industry is booming in Australia, with 50 independent producers making boutique spirits.

More than 20 of those also promote themselves as tourism destinations.

Among them was Spike Dessert, who has been making rum at Ord Hoochery in the East Kimberley for 16 years.

The Texan – whose full name is Raymond Bernard Dessert III – said while production and sales were steadily increasing, profit margins remained slim.

"The tax rate we pay is one of the highest in the Western World," he said.

"And it makes it very difficult, because imported spirits can be brought into this country so much cheaper than for what we produce for in this country.

"If I had more profit, I could invest in more equipment.

"With new equipment we'd become cheaper and we'd become a stronger business within this country."

Source: ABC News, Erin Parke, 21^st October 2015
Originally published as: Australian spirit makers call for tax breaks to compete with imported labels