Wine body rejects volumetric tax proposal
The wine industry remains divided over the future taxation system for alcohol, with the peak winemakers’ body refusing to support a system based on volume.
Winemakers Federation of Australia chief executive Paul Evans said producers did not have a unified position on tax reform for the industry, with interests divided by the volume and price of alcohol being made by winemakers across the nation.
“Consultation with industry has confirmed mixed views on the optimal tax platform for the Australian wine sector, with opinions heavily dependent on the various models and portfolio weightings of the individual businesses,” Mr Evans said.
“WFA does advocate for no increase to the level of wine tax revenue, no reforms to wine tax arrangements that are driven by social-policy objectives and a differentiated tax rate for wine from other alcohol categories. These positions have the support of industry.
“WFA also advocates for reforms to the Wine Equalisation Tax rebate.”
The Henry tax review in 2009 recommended adopting a volumetric tax levied according to alcohol content which, if introduced, would change the economics of the industry, increasing the price of cask wine and reducing the price of premium wine.
Under Australia’s current tax regime, beer, spirits and alcopops are taxed on the basis of their alcohol content and container size, with spirits and alcopops taxed at a higher rate because of concerns about dangerous drinking. Wine, however, is taxed on wholesale price, with cheaper cask wine attracting little tax while more expensive bottled wine attracts a greater proportion of tax per standard drink.
The industry is awaiting a discussion paper this month as part of the tax white paper process, amid concerns from some in the industry that the system is plagued by tax rorts and inefficiencies.
Tax-reform discussion comes as the wine industry sees a 5 per cent increase in average wine grape prices this year.
Despite the rise in the overall price, 92 per cent of production from warm inland regions was unprofitable.
WFA attributed the general price rise to more favourable exchange rates and Australia’s signing of free-trade agreements in Asian markets.
Wine Grape Growers Australia chairman Vic Patrick said the Abbott government had to commit $25 million in the next four years to fund further marketing abroad.
Source: The Australian, Rebecca Puddy, July 20th 2015
Originally published as: Wine body rejects volumetric tax proposal
