Wednesday, October 17, 2012

Out of excuses. But Swan still won't fix the wine tax

Treasurer Wayne Swan has ruled out changing alcohol tax in next week’s minibudget despite last-minute lobbying and a finding Australia’s wine glut is as good as over.

A scathing assessment by the 2010 Henry Tax Review described Australia’s system of differently taxing beer, spirits and wine as “incoherent” and recommended instead a uniform rate of tax to apply across all forms of alcohol, set at the rate for full-strength beer of 39 cents per standard drink.

The plan would have cut $100 from the price of a bottle of heavily taxed Grange and leave the price of mid-range bottles little changed, but lift the price of lightly-taxed four litre cask wine from $15 to in excess of $40.

Mr Swan rejected the recommendation at the time saying he would not “change alcohol tax in the middle of a wine glut and where there is an industry restructure underway”.

A review by the Foundation for Alcohol Research and Education delivered to the Treasurer yesterday finds that two years on the glut is largely gone and the industry “reaching equilibrium”.

“The glut is over and Mr Swan is all out of excuses,” said Foundation chief executive Michael Thorn.

But a spokesman for the Treasurer told the Herald the government did “not have any plans for changes in this area”.

Mr Thorn said implementing the Henry recommendations on alcohol tax would give the government another $1.5 billion per year... Modelling by the Allen Group finds it would cut cask wine sales 60 per cent.

Bottled wine producers Treasury Wine Estates and Pernod Ricard swung their weight behind the change in their submissions to last year’s Tax Summit. Between them they produce Australia's top three brands: Penfolds, Wolf Blass and Jacob’s Creek.

In today's Sydney Morning Herald

What Wine Glut

AHA Henry price modelling April 2010

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