July (No. 498)
Duty-free 'concessions' unfair
Thank you Richard Smart, for highlighting how the new travellers' duty-free 'concessions' impose an unfair impost on the wine sector. Unfortunately this is just one of the ways in which the Customs regime penalises industry mind-opening and experimentation.
It would matter less if we did not have massive global marketing ambitions. How can an industry effectively access consumers' hearts and minds if it is not aware of what currently turns them on, or indeed, what turns them off? One way to do this is to spend time in other wine countries doing research at first hand. Another, simpler way is to bring wine to Australia for educational and development purposes. In fact, this is the only way that many in the industry are going to effectively be informed. But the costs of doing this are prohibitive.
For those who try, the first shock is to find that, despite there being no transaction that has actually taken place in Australia, the Wine Equalisation Tax (WET) applies nevertheless, as does GST. And, due to the fact that Customs applies import duties and taxes on a CIF (cost, insurance and freight) basis, this means that Customsí duty, the WET and the GST are applied as a percentage of the landed cost of the wine. So we have to pay the WET on the airfreight too! Airfreight can be as much as $250, even on tiny shipments from countries such as India or China. On top of all this there are 'Australian Government Charges', the Australian Government Trade gate fee and a disbursement fee. A shipment to me of eight bottles from India, with a declared value of $20, ended up costing me just under $600, including the airfreight. Two bottles recently sent to me for evaluation by a friend in the industry in Thailand, with an FOB value of $2 each, cost me a total of $110.57 - $55 per bottle, simply for post-arrival charges (airfreight which was covered by the shipper).
This acts as an enormous barrier to information gathering and experimentation. It effectively denies the industry an opportunity to monitor its competitors, both from an import market perspective as well as, increasingly, a domestic market perspective. It may be OK for the big corporates, but it is impossible for the small operators, for educators and for students.
I believe it is time that the industry presses the Government for a rational re-think of these provisions to remove a major obstacle to the gathering of information that can improve the industry's capacity to earn, retain or improve its competitiveness, in both export and domestic markets. Surely there is scope for a category that, at the very least, exempts small consignments of imported wine from the WET?
New South Wales