The Facts

Supporting Australian Wine – an industry calling for the status quo in taxation for the sake of jobs and for the sake of regional Australia.

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Australian Tax Forum

A tax forum is proposed for October to examine the recommendations of Australia’s Future Tax System – the Henry Tax Review.

While the Henry Tax Review supported a move to a volumetric tax system for all alcohol sold in Australia, the Rudd Labor Government rejected this recommendation due to the industry suffering from a wine glut and undergoing a significant restructure.

The Australian wine industry continues to endure its toughest period in two decades.

Our industry continues to face significant challenges, including access to water, climate change, imported surplus wine and the unprecedented strength of the Australian dollar. These issues are impacting on the viability of the wine industry at both the grower and producer level.

Imposing a volumetric tax on wine would result in a critical drop in sales coupled with a significant reduction in Australia’s valued vineyard area.

It is for these reasons that the wine industry strongly supports the maintenance of the current tax regime.

A volumetric tax would hurt regional employment, trade and tourism.

It would especially hurt the inland irrigated regions in South Australia, Victoria and New South Wales in the Sunraysia, Riverina and the Riverland.

The wine industry needs certainty in this time of difficulty and the best result for us is for the tax regime to remain the same.

Our industry, our regions and our jobs depend on it.

Volumetric Tax - The Facts

Wine directly supports 60,000 Australian jobs across 64 wine producing regional communities.

If wine was taxed the same as beer:*

• 95% of wine would rise in price
• Sales would fall by 34%
• There would be a reduction in vineyard area of 29,000 hectares
• There would be 12,000 job losses including small producers forced out of business due to the WET rebate
• Over 9000 jobs would be lost from the 64 regional communities.
• An additional 3,000 job losses would come from small wineries made unviable.

* WFA Henry Tax Review Submission

The Impact on our Industry

A volumetric tax will hurt all industry participants and suppliers.

• The complexity of a volumetric tax will burden small and medium sized wineries.
• Modelling shows that volumetric tax will have a negative impact on most wineries.
• Volumetric tax would mean a seven day taxation cycle.
• It will have significant cash flow implications for wineries and will create additional paperwork and increased compliance costs.
• Wineries would be forced to find additional working capital and the cash flow impact of earlier timing of tax payments would trigger business failures.
• The best result for the industry is for the tax regime to remain the same.

Wine and Tax

• The wine sector contributed a net $707m in alcohol specific tax under the current Wine Equalisation Tax (WET) in 2008/09 and paid $280m in GST payments in 2008/09.
• Amongst New World wine exporters, Australia is the highest taxing country for 750ml wine > $11 retail and one of the highest for > $7.50 750ml bottles.
• Australia already has one of the highest tax regimes in the world, and a change to the beer rate volumetric tax, combined with the removal of the WET rebate, would wipe out the majority of smaller wineries and grapegrowers in regional areas.
• Wine taxation in most other wine producing nations is less than beer and spirits.

Volumetric Tax and our Regions

• A volumetric tax would have a significant impact on regional employment, trade and tourism.
• Countries with wine industries support those industries with favourable taxation arrangements and Australia should do the same.
• Wine is different due to its rural regions footprint and its economic contribution to our regions.
• A volumetric tax would have a detrimental impact on low cost grapes from irrigated regions.