Spirited plea as distillery calls for ‘unfair’ tax overhaul

A popular Woombye distillery has joined the chorus of liquor producers seeking urgent tax relief, warning it’s blocking them from employing more local workers.

Matt Hobson of Cavu Distillery. Photo: John McCutcheon

A popular Woombye distillery has joined the chorus of liquor producers seeking urgent tax relief for the industry, warning it is blocking them from employing more local workers.

Cavu Distilling co-owner Matt Hobson has voiced his support for the Australian Distillers ­Association which is calling on the Federal Government to cut the spirits excise rate and freeze biannual CPI increases on the tax for three years.

The alliance is also campaigning for an increase in the excise refund limit from $100,000 to $350,000 each financial year, putting craft distillers on an equivalent level of support to small wine producers.

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Mr Hobson told the Daily the spirits tax, which is the third highest in the world and almost 10 times higher than the US rate, was harmful to the Coast economy's Covid recovery.

"We're very happy as a conscientious business to contribute to the community through tax," he said.

"(But) the tax on spirits is very unfair and regressive in that it's multiple-times higher than the equivalent tax on lower alcohol beverages, including beer."

Having already claimed the maximum rebate of $100,000 this financial year due to the economic impacts of the pandemic, Mr Hobson said the distillery was unable to expand.

Matt Hobson of Cavu Distillery has voiced his support for the Australian Distillers ­Association. Photo: John McCutcheon

"We're already in a situation that the rest of the financial year gets harder for us, not easier, because effectively we don't have that money coming back into our business," he said.

"We'd love to be using that money through employment … but unfortunately until the Federal Government changes its position … our business is really frozen in that inability to employ the people we want to employ."

Mr Hobson said not being able to access a higher rebate was "slowing" the business down despite its potential to support more Coast jobs.

"It's all about assisting our Sunshine Coast economy respond and grow and recover from what has been and continues to be some very difficult economic conditions as a result of Covid," he said.

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"Last financial year we didn't come close to the maximum rebate, this year in a very Covid-affected economy, we're growing rapidly but our growth is being slowed and stymied by not having access to a greater total rebate in any financial year."

Mr Hobson said the distillery paid $26.39 per bottle in excise tax to the government, which was effectively part of the retail price and made producing their Coast-grown spirits an expensive feat.

"If we can get the support from the Federal Government that we're requesting, there's many, many millions of dollars of benefits to the Australian economy through employment, support of local businesses," he said.

Treasurer Josh Frydenberg defended the Federal Government's support of distilleries despite backlash from the industry.

Treasurer Josh Frydenberg in the House of Representatives in Parliament House Canberra. Picture: NCA NewsWire/Gary Ramage

He said the government lifted the excise refund cap for distilleries from $30,000 to $100,000 in 2019.

"In December 2020, the government announced that simplifying and streamlining the excise regime would be a new priority area for the Deregulation Taskforce," he told the Gold Coast Bulletin.

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"In addition, the government has fast tracked the reduction of the company tax rate to 25 per cent by 2021-22 for small and medium sized businesses (SMEs) with a turnover below $50 million.

"This complements the substantial support provided to businesses through the JobKeeper payment, cash flow boost and other economic support payments. This support has been a critical economic lifeline to businesses across the country during the COVID-19 pandemic."

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