IN a pre-budget submission, spirit distillers are calling for the federal government to implement a “fairer” tax regime.

The submission, handed down to federal members by the Australian Distillers Association (AIA) this week, sees distillers asking for a three-year freeze on twice-annual tax hikes and an increase to rebates.

Currently, Australia’s tax rate for spirits is the third highest in the world, according to AIA, and is determined by the alcohol percentage – not the value of the bottle, like wine – and increases every six months. 

Because of this, the submission also calls on the government to bring spirit taxes in line with the taxes imposed on winemakers.

For Clyde Morton, the owner of the Big River Distilling Company, based in Fyshwick, that means a standard $85 bottle of gin can generate up to $29 in tax and GST before production costs are even accounted for, which is a rate much higher than wine or brandy, he says. 

“It affects little guys when they’re starting up quite dramatically,” says Clyde.

“We can’t be increasing our wholesale twice a year. The retailers just won’t accept it and with good reason. So we have to absorb that increase.”

And then the next step is to try and bring the rebate to parity with winemakers, he says. 

The campaign includes an increase to the excise refund limit, from $100,000 to $350,000, to grant small distillers an equivalent level of support to small wine producers, say AIA.

Until last year, Clyde says spirit distilleries only received a refund on duties up to $30,000, which increased to $100,000 due to lobbying but still sits well below the $350,000 threshold afforded to winemakers.

“What they’ve found is that those two measures would be revenue positive,” says Clyde, referring to the three-year freeze and rebate reform. 

“It will prevent margin erosion over those three years and that money can be reinvested back into the growth of the business.

“I’m growing at the moment and I could easily put on a couple of people so a rebate like that would be put to immediate use.”