Adjournment: Taxation

I rise to bring to the attention of the Senate a letter requesting tax reform that I have sent to the Prime Minister on behalf of Australia's craft distillery industry. In Tasmania alone, there are at least 14 distilleries, among more than 50 Australia wide, which produce some of the finest whiskies and gins in the world. Tonight, while I advocate for tax changes which will benefit all Australian craft distillers, in particular I invite all who hear this message to visit Tasmania so that they can eat, drink and be goddamn bloody merry. Due to time constraints, I will read an edited extract of my letter to the Prime Minister, which says:

Dear Prime Minister

I am writing to seek your support for policy reforms that would benefit Australia's burgeoning craft distillery industry - which already has a strong presence in Tasmania and looks to continue to grow.

Through my discussions with local distillers, it has become clear that the existing taxation and industry assistance arrangements - need serious reform to support our distilling industry and remove discriminatory barriers.

The reform proposals I outline below do not seek preferential treatment for local distillers but, rather, seek to mitigate some of the discrimination against the industry to encourage investment and growth in the industry.

The distilling industry in Australia is subject to a taxation system that actively discriminates against it relative to other beverage alcohol producers both in terms of rates and compliance requirements. This discrimination is then exacerbated by the fact that other sectors of the alcohol industry receive various forms of assistance that the distilling industry does not.

The Government's very own tax reform discussion paper "Re:think" highlights perfectly the tax discrimination against spirits.

Alcohol tax on a Standard Drink of spirits is $1.01 — that is double the tax on full-strength packaged beer ($0.45) and more than three times the tax for a $15 bottle of wine ($0.28).

This discrimination puts distillers at a significant disadvantage and acts as a barrier to investment in the distilling industry.

The need for alcohol tax to be part of any serious tax reform package was highlighted by the Henry Tax Review, which recommended a single volumetric rate for all alcohol beverages.

Under the Wine Equalisation Tax (WET) rebate, all Australian winemakers regardless of size can sell $1.7 million worth of wine without paying any alcohol tax. In effect, they can put that wine into the market alcohol tax free.

The brewery refund scheme provides eligible independent breweries with a beer excise refund up to a maximum of $30,000 per financial year. This is available to all breweries.

In contrast, distillers receive no such assistance in any form.

The Government's ongoing Tax White Paper process offers a once-in-a-generation opportunity to bring good public policy to the forefront of developing a new alcohol tax system. Indeed, any tax reform package that does not include reforming alcohol tax would not be real reform. These reform proposals have the support of our distilling industry.

In talking to distillers in Tasmania, it has become clear to me that the massive discrimination against spirits in terms of tax paid is a significant barrier to Australia's distilling industry and discourages innovation and investment.

I believe that any tax reform package put forward by the Government must end the discrimination against the spirits industry. I seek your support to transition all alcohol beverages to a simple, fairer system through a single volumetric tax rate, as recommended by the Henry Tax Review.

A single, fair rate would allow Australia's distilling industry to grow and compete on a level playing field and end the discrimination and complexity of the current arrangements. This is good policy that supports innovation and investment and removes the single largest barrier to our emerging distilling industry.

The discrimination here is obvious and also requires immediate attention. The Government's WET rebate discussion paper states that the clear intent of the WET rebate is to benefit small wine producers in rural and regional Australia.

The category 'small wine producers' should be interchangeable with 'small distillers'. I propose that the WET Rebate (as well as the brewery refund scheme) be replaced with an alcohol industry wide producers' rebate. I thank you in advance for the due consideration that these reform proposals will be given.