WET a burden on local producers
Margaret River premium wine producers claim the Federal Government is running a tax on quality which is putting an unfair burden on the region.
The winemakers say the wine equalisation tax (WET), which is charged at a rate of 29 per cent on top of the GST, puts a greater impost on premium wines than on cheaper varieties.
While the rate does not vary by area, the winemakers claim their region is paying a disproportionate amount because they make about 20 per cent of the nation’s premium wines.
Moss Wood winery owners Keith and Clare Mugford are among the wine producers calling for an overhaul of the tax; wanting it based on volume, instead of value.
“The WET is a frustrating issue for us,” Mr Mugford said.
“The Rudd government, despite the Henry tax review presenting a clear and concise analysis recommending volumetric taxation, chose to retain the present system and we remain stuck with it.
“Wine is taxed by value rather than volume and this essentially turns it into a tax on quality.”
WA Agriculture Minister Alannah MacTiernan said she supported the premium wine producers, claiming the current system was more beneficial for Eastern States producers of bulk wine.
Ms MacTiernan said the tax was initially intended as a volumetric tax but in 2000 the Howard government buckled under political pressure from bulk wine producers in the east to base it on value instead.
She said there had not yet been any financial analysis on how a change to a volumetric tax would affect WA’s smaller producers, but she said there was scope to protect their livelihoods by exempting some boutique wineries from the WET, or through a rebate system.
Ms MacTiernan said the tax in its current form was a “very bad social policy”.
“It’s making that cheap end of wine incredibly cheap,” she said.
Margaret River Wine Association chairman Barry House said the existing WET regime was “definitely detrimental” to quality Margaret River producers and exporters.
“There is no doubt in my mind that we should move towards a fairer, volume-based system which promotes excellence not mediocrity,” he said.
Australian wine was already over-taxed compared to overseas wines and Mr House said WET rebates were seen as a “bandaid” solution and mostly returned some of the money producers already paid in tax.
“We are working with Wines of WA to develop a long-term, fair, and just volume-based taxation model which will be acceptable to the Margaret River, WA and national wine industry,” he said.
However, Margaret River vintners have an uphill battle ahead of them, with Federal Treasurer Josh Frydenberg saying yesterday the Federal Government had no plans to change the WET, saying the Government was working on tax measures to benefit all small business.