WFA Taxation Statement
There are strong economic and social policy arguments against increased taxation of wine. It would be counterproductive as a revenue raiser and ineffective as a weapon against alcohol abuse.
Australia already pays the highest domestic wine taxes of any wine producing nation and further increases would penalise and directly inhibit the sustainability of a $2bn export industry that directly and indirectly employs up to 60,000 people, mainly in regional Australia.
In particular, higher taxes would limit the ability of struggling businesses to make the restructuring and investment commitments needed to deal with an ongoing oversupply of wine and grapes that is artificially depressing prices and damaging Australia’s international reputation.
The wine sector needs certainty if it is to transition to a new structure based around long-term sustainability and market opportunity.
It is significant that in the aftermath of the GFC very few nations chose to increase alcohol taxes to help bring their Budget back into a degree of balance.
The wine sector acknowledges concerns around excessive alcohol consumption in Australia, but emphasises that there is no evidence to support claims that increased taxation and other pricing measures, such as minimum pricing, would help address this.
Heavy drinkers are not price sensitive but moderate drinkers are; thus those who contribute negligible social costs would be unfairly penalised.
Professor Sijbren Cnossen, who was engaged by the Australian Government to look at excise taxes as part of the Henry Review, stated that: “The excise taxation of alcohol is a fairly blunt instrument, causing welfare losses to non-harmful users while at the same time not adequately controlling the drinking of harmful users.”
Based on this evidence, the WFA taxation position is:
- No overall increase in the total tax revenue from the wine sector.
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Reform of the WET Rebate to remove unintended recipients and alleviate unintended consequences of the system that are distorting supply decisions.
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No use of tax or artificial minimum pricing measures as a lever for health reform, as non-price measures better target hazardous consumption.
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Maintenance of the differential tax rates for wine, beer and spirits (ie, no ‘equivalency’) to reflect the significant differences between wine and other forms of alcohol.
Who do I contact?
Paul van der Lee, Manager, Economics & Policy
Telephone: 08 8222 9255
Email: paul@wfa.org.au