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21/10/2014

Tax a threat to region’s winegrape growers

Murray Valley Winegrowers (MVW) is gearing up for another fight against taxation arrangements that would wipe out much of the region’s winegrape production.

There’s concern that a wide-ranging tax review, slated to start within months, could result in recommendations for changes in the way wine is taxed, as suggested in 2009 by the 'Henry tax review'.

The Henry report recommended switching from the current system of taxing wine according to its value (ad valorem tax) to one based on alcohol per volume (volumetric tax).

Mike Stone, MVW chief executive, says a volumetric tax would more than double the price of cask wine and add around 30 per cent to the cost of popular premium wine.

“These are the wines that the Murray-Darling and Swan Hill regions produce, in tandem with the Riverland in SA and Riverina in NSW,” he said.

“These are the wines of choice for 80 per cent of Australians, but even upper-end premium wines would be more expensive under a volumetric tax.”

The push for discarding the current ad valorem tax in favour of volumetric has traditionally come from the spirits industry and influential health lobby.

“The wine industry has been a long time supporter of the campaign to drink in moderation and acknlowedges that a small percentage of drinkers consume alcohol irresponsibly, but hitting all wine drinkers with a massive price hike would be grossly unfair,” Stone said.

A study undertaken three years ago suggested that under a volumetric tax, the demand for cask wine would drop by around 40 per cent and demand for popular premium wines would fall by a third.

“Economically, this region’s winegrape industry is on a knife-edge," Stone said.

"Prices for major grape varieties are the lowest they’ve been in 10 years and losing up to 40 per cent of customers at this time would be catastrophic.

“The Australian wine industry is already taxed higher than all its major competitors.

"The Federal Government should rule out now any tax change that would increase the burden.”

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