Changes may cause job cuts

While beer and spirits are taxed per unit of alcohol, wine is taxed on the basis of its wholesale price.
While beer and spirits are taxed per unit of alcohol, wine is taxed on the basis of its wholesale price.

NEW England wine producers have warned changes to a tax originally designed to better support wine producers in rural and regional Australia could end up pushing many to the financial wall.

The fallout for the wine industry is continuing after the 2016/17 federal budget revealed changes to the Wine Equalisation Tax (WET) rebate, which supporters say is long overdue to stop widespread rorting of the rebate, but which critics argue will have the unintended consequence of business closures and job cuts.

While beer and spirits are taxed per unit of alcohol, wine is taxed on the basis of its wholesale price, at a rate of 29 per cent.

As it stands now, the first $500,000 of each producer’s tax is able to be rebated, but the budget has proposed cutting that rebate cap to $350,000 by July 1 next year and then to $290,000 a year later.

Wine producers wanting to claim the rebate will also have to own a winery or have a long-term lease on one.

That poses an immediate problem for smaller vineyards, many of which choose to have their winemaking done under contract, rather than making a significant investment in a winery.

“A significant number of the smaller players in the New England wine industry don’t meet this criteria as announced ... these local wineries have no ownership or lease on the facility where their wine is made,” said Mark Kirkby, who runs Toppers Mountain Wines at Tingha and is the acting president of the New England Wine Industry Association. 

“This change, if not modified, will reduce the revenue to these wineries by between 15 and 20 per cent of their total sales.”

For cellar doors across the state, Mr Kirkby said, the impact could be devastating.

The proposed changes come at a time when the local industry had enjoyed an increase in wine tourism traffic in recent years, Mr Kirkby describing a substantial increase in visitors at his own vineyard, which opens its cellar door by appointment.

The type of upheaval caused locally by the rebate rethink was anyone’s guess, but wouldn’t go unnoticed.

“I don’t know exactly how people would respond (if the changes proceed), but it would be a significant impost on their business,” Mr Kirkby said.

He said everyone had been waiting until after the federal election to start really pushing for reconsideration of the WET changes, but once the result was known in New England the local association would begin lobbying.

“We will be starting to knock on some doors,” Mr Kirkby said.