TWE supports wine tax reform

Treasury Wine Estates (TWE), Melbourne, has said in its submission to the Federal Government that it is in support of the wine tax reform with additional inclusions on the restructure.

The company believes wine tax arrangements have a fundamental influence on the structure and sustainability of the Australian wine industry and that wine should be taxed on a volumetric, revenue neutral basis.

It has been suggested in the submission that the tax should be a simple, three-tiered structure seen in other countries around the world such as Canada, Denmark, Finland and Germany.

The company also claims that a flat volumetric tax across all alcohol categories would be ineffective in tackling alcohol abuse as problem drinkers would likely shift to the next-cheapest form of alcohol.

The Wine Equalisation Tax (WET) rebate was introduced with the GST to assist small businesses with a rebate on the tax paid when income was low. TWE strongly urges this rebate to be abolished as the short-term advantages outweigh the negative impact it makes on the structure and sustainability of the whole industry.

“We believe the WET is a damaging subsidy that - in direct contrast with its stated objectives - is taking profitability out of the wine sector and transferring the benefit to retailers and opportunistic traders,” states TWE.

The company believes the current ad-valorem tax structure and WET rebate is keeping the price of cheaper wine low and disproportionally taxing premium product.

By Kylie Rhodes