Tax Reform Might See More Expensive Wine

January 19, 2009 International Taxation  No comments

Australian wine makers are calling for the current tax rebate they receive to be untouched in the face of possible alcoholic beverage tax reform.

The way alcoholic beverages are taxed in Australia is currently under review by the Australian Treasury’s Secretary Ken Henry. The primary goal of the review is to investigate the possibility of simplifying and streamlining the way alcohol is taxed. As it stands, various types of alcohol all experience different taxes and rebates, a system that is claimed to be complex.

One aspect of the current situation is the Wine Equalization Tax (WET) which, since its introduction in 2004, has given small and medium sized winemakers a tax rebate of 29%. Some claim this system to be unfair and biased towards wine.

The abolition of the WET system will undoubtedly result in a marked decline of wine production and subsequently, higher prices for Australian wine both within Australia and its export partners, like New Zealand.