Tuesday, May 4, 2010

The Henry Review – Steady as it goes

Notwithstanding persistent leaks that there would be a volumetric tax based on the alcohol content of all alcoholic products, the Government has decided to stay with the existing system for wine. It won’t please everyone in the industry (especially not Margaret River and Tasmanian movers and shakers) but most are pleased with the outcome. Stephen Strachan, Chief Executive of the Winemakers’ Federation of Australia, says:

“Unnecessary change would have devastated the wine industry at a time when it is dealing with its toughest period in more than two decades. Our modelling shows that taxing wine in the same way as packaged beer, and removing the WET Rebate, would see 95% of wine increase in price, sales volumes fall by 34%, 29,000 hectares of vineyard become redundant and about 12,000 jobs lost.

Most of those jobs would be in regional areas where wineries are crucial contributors to tourism and thus to economic development.”

The cynical will say that this (along with many other responses by the Government to the report) is driven by the upcoming election. There will doubtless be continuing concern that this is a not-now, and a probably-later decision.


Andrew Jackson said...

What do you think of those comments James? We certainly don't need to reduce the size of the Wine producers in Australia. Just focus on making it even better.

Anonymous said...

Does the current WET system reward lower quality and discourage excellence? Does it ignore the negative health effects of cheap cask wine and fortified wine? Is it designed to benefit the big big wine companies and toss in a rebate to placate small producers?

Lachie Storen said...

Any viable industry needs strong representation through all price points. Removing the WET and replacing it with a volumetric tax would have devastated the low value segment which in turn would eventually impact on the premium segment. For instance, consider the value of cheaper wine attracting young drinkers, who eventually move to more premium wine as they mature.
As a retailer I am glad that we have not moved to a volumetric tax.

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