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17/02/2010

Another blow for winegrape growers

The Murray Valley Winegrowers Incorporated says at least 15% of the region’s winegrape production would be under threat if the Federal Government changes the way wine is taxed.

Chief executive officer Mike Stone says the impact would be an increase in the price of nearly all wine and particularly cask wine, which he says would more than double in price.

“About 15% of winegrape production in the Murray Valley is destined for the cask wine market,” he said.

“That’s around 50,000 tonnes that would be under threat because of the anticipated consumer backlash should the price of cask wine more than double.

“Australia-wide, it’s estimated that around 250,000t are used in the production of cask wine.”

Stone says grapes for cask wine come primarily from the major inland regions, such as the Riverland, Riverina and Murray Valley (Murray-Darling and Swan Hill wine regions).

But as part of the Henry Taxation Review, the government is believed to be considering changing from a value-based (ad valorem) tax to an excise on alcohol content.

This would increase the price of cheaper wines while the price of premium wines would decrease.

Stone says tax already amounts to a quarter of the cost of an average bottle of wine, earning the Commonwealth more than $700 million per annum.

“Mixed messages are coming from the Federal Government – is there to be a tax hike on wine because the Government needs the money, or does it believe that more expensive wine will result in less consumption and fewer social and health problems?” he said.

Murray Valley Winegrowers has called on the Federal and State Agriculture Ministers to defend growers against the new tax that would send “even more to the wall”.

“The Murray Valley is already reeling from the combined impacts of grape prices that don’t cover costs, increased costs flowing from the new Wine Industry Award, thousands of tonnes of grapes for which there are no buyers, continued uncertainty surrounding water allocations and Commonwealth intentions regarding irrigation entitlements,” Stone said.

“It’s time Federal Minister Tony Burke and Victorian and New South Wales Agriculture Ministers Joe Helper and Steve Whan took a stand in support of the hundreds of winegrape growers in the Murray Valley who will be hurt the most from a switch to volumetric tax.”

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