Mayo by-election issue: Double-dip taxation sapping the spirits of SA’s boutique distillers

WE produce the world’s best gin but taxation is preventing South Australia’s distillers from enjoying the same success as the state’s famous wine industry.

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THE Adelaide Hills’ burgeoning boutique booze industry could replicate the success of the wine sector if it were not for double-dipping taxation, spirit distillers say.

A coalition of local craft distillers have joined forces and are using the Mayo by-election to campaign for a freeze in excise hikes, arguing Australians pay almost 10 times the tax on spirits that US consumers pay.

A group of six family-owned businesses including Ambleside Distillers, Applewood and the McLaren Vale Distillery have written to Mayo candidates asking for their support for a freeze on the twice-yearly indexation of spirits excise.

 

Adelaide Hills Distillery founder Sachsa La Forgia said businesses like his wanted to remind politicians that the tax is hampering development of the growing sector. Picture: Tait Schmaal.

 

Beer and spirits are levied on a per litre of alcohol basis, at rates that vary according to the type of beverage, size of container and alcoholic strength.

However, wine is taxed at a much lower rate based on a percentage of wholesale prices.

The excise means spirit distillers pay almost twice as much in excise as beer brewers.

Adelaide Hills Distillery founder Sachsa La Forgia said businesses like his wanted to remind politicians that the tax is hampering development of the growing sector.

“The current tax system is prohibitive and punitive,” Mr La Forgia said. “Every six months it is indexed up. It is a volumetric tax of about $85 per litre of alcohol, so on a bottle of gin, it is about $25 per bottle.

He said the demand for boutique spirits was coming from “hip” younger people to older generations “who have been drinking gin for 40 years and are pumped that they have a bit of choice now.”

The group believes there is significant potential for growth in premium spirits exports from South Australia.

Ireland exports around $300 worth of spirits per capita annually, compared to Australia, which currently exports $4 per capita annually.

Trudy Dickson, owner of Ambleside Distillers in Hahndorf, said there was no reason why SA’s premium spirits industry could not mirror the great success of the state’s wines in overseas markets.

“We just need to give the industry a fair go on tax,” Ms Dickson said. “We hope to get support from our representatives in Mayo to achieve this.”

The group has written to all candidates in the Mayo by-election and expects responses this week. Mr La Forgia said they would keep the pressure on all sides of politics in the lead-up to the Federal Election.