If not a volumetric tax, then what?

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If not a volumetric tax, then what?

On 20 December 2000 via the Excise Regulations 1925 (now Excise Regulation 2015), a ‘microbrewery’ rebate of 60% up to $10,000 was made available for independent breweries who did not produce more than 30,000 litres of beer for the current and previous financial year. On 4 August 2012, a further regulation commenced providing the 60% rebate up to $30,000, removing the total production cap of 30,000 litres and replacing ‘microbrewery’ with ‘eligible breweries’. Leading up to the making of the regulation, microbrewery refunds were a topic of discussion as part Federal Parliament’s Private Member’s business. The comments made by various MP’s (from major political parties and independents) who spoke about amending the restrictions variously noted microbreweries were valuable tourist attractions, important job creators, innovators and internationally renowned. These descriptions could be applied to the distilling industry.

As we have alluded to in previous weeks, distilleries – much like boutique breweries and boutique wineries – overwhelmingly cater to those prefer quality over quantity and appeal to people who are discerning and willing to try different beverages. Research published by IBISWorld in December 2015 found that at that time there were 250 craft breweries and the trend is for this number to increase.
The distilling industry is a small player within the spirit manufacturing industry, let alone the Australian alcohol manufacturing market. However, IBISWorld research has showed that Australian manufactured spirits have benefitted from demand from bars, pubs and restaurants (as well as international acclaim) and this is without any sort of tax relief that the wine and beer industry benefit from.

Gin in the UK

While traditionally a very popular drink, until recently gin was synonymous with the older generations and not seen as a desirable drink for anyone else. That has changed with a reduction in Government taxes, a revival in the art of gin making and a drinking public who want quality products. The industry would not have been able to thrive the way it has if any of those elements were not present.

What we suggest

Just as a regulation under section 164 of the Excise Act 1901 (Cth) was created for microbreweries/eligible breweries, we believe that a similar regulation should be made for ‘eligible distilleries’, indeed it could almost be copied word for word. This is not aimed at the large corporations who produce well known spirits but the distilleries that we have focussed on in the last few weeks who are increasingly receiving recognition for their quality products. The growth of craft beer and also the popularity of gin in the UK show how tax assistance in conjunction with innovative practices can benefit all parties. The future of the distilling industry in Australia is bright but it can be even brighter with appropriate, not punitive regulation.


Reports relied upon are IBISWorld Industry Report C1212: Beer Manufacturing in Australia (2015) and IBISWorld Industry Report C1213: Spirit Manufacturing in Australia (2015)

 

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