Tuesday, April 12, 2011
A leading wine industry figure has broken ranks declaring it’s time to adopt a Henry Tax Review recommendation that would double the price of cask wine and cut more than $100 off the price of a bottle of Grange.
Treasurer Wayne Swan disowned the recommendation on the release of the review saying he would not change alcohol tax “in the middle of a wine glut and where there is an industry restructure underway.”
The confusing mish-mash of taxes described by the Henry Review as “incoherent” taxes most beer on the basis of alcohol content but taxes wine on price, leaving cheap cask wine almost untaxed and finer wine overtaxed unless it is made in a small winery which gets a rebate.
“It is not only illogical, it is destroying the Murray River and Indigenous lives,” says Philip White, editor of the wine industry website Drinkster.
“We have huge refineries and industrial grapeyards using up to 1200 litres of water to make one litre of wine which sells for less than the cost of good bottled water but is three times the alcoholic strength of your average beer,” he says in a post that has “whizzed around the wine industry like a grenade with the pin out”...
“Half of all wine sold in Australia is in bladder packs,” he told The Age. “Much of it is sold at very low price points with very little profit to Aborigines in places such as Alice Springs.”
“The big ethanol factories need the little guys for what we call colour and nuts and berries, the image that helps them lobby.”
Industry estimates suggest if the Henry Review recommendations were adopted the price of four litre cask wine would jump from $14.75 to $40.69, putting it beyond the reach of many in Indigenous communities.
The review says when the Northern Territory restricted the sale of casks in 2007 sales fell dramatically but sales of alcohol in other forms increased. It says a standard tax rate would function as an alcohol “floor price” that could not be escaped.
Melbourne economist John Marsden who reviewed alcohol tax for the New Zealand law commission said the two must vunerable alcohol consumers, teenagers and heavy drinkers would benefit the most from the changes recommended by Henry. In New Zealand he recommended an increase in alchol tax of between 50 and 100 per cent.
Mr White rejected the Treasurer’s argument that the changes could not be introduced while the industry was restructuring saying it was always restructuring as unwary conglomerates bought up unprofitable refineries and tried to make a profit on ever finer margins.
“It’s like a perpetual motion machine. Fosters is about to be dismantled if it can find a buyer. Whoever picks up the pieces will try to sell wine even cheaper and be broken up itself,” he said.
“It’ll only stop when ethanol is properly taxed. If you add up the health and environmental costs of what these guys are doing and set it against their profit it doesn’t make any sense.”
“The implications of taxing these factories out of existence are huge, I am aware of that. It would have to be phased in. Small wineries would suffer too, but many are essentially hobby farms making nothing of exception.”
Published in today's SMH and Age
AHA Henry price modelling April 2010
. Shock! Prices affect behaviour.
. The end of cheap wine, and other things to look for in the Henry Review
. What Swan won't do