Winemakers keen to see alcopop tax loophole closed

Posted by Daniel Palmer on 4th December 2008

The Winemakers’ Federation of Australia (WFA) has labelled the latest action by the Distilled Spirits Industry Council of Australia (DSICA) in delivering look-alike alcopop products to Government Members and Senators, as nothing more than a cynical media stunt.

The WFA is supporting attempts to close the loophole that allows the overseas practice of manufacturing so called ‘wine-pops’ and ‘malternatives’ by using alcohol stripped from wine or beer and selling them at a reduced rate of tax.

The RTD or ‘alcopop’ tax was introduced in May as concerns about binge drinking escalated. Since then Independent Distillers has produced a product called ‘Bolt’, which has exploited a loophole in the new tax arrangements by using the alcohol from beer to create a so-called ‘malternative’. The product tastes very similar to many alcopops on the markets yet sells for up to $25/carton cheaper. By using the traditional beer or wine production method and then taking out the beer/wine taste and adding sugar and flavours, alcohol companies can reduce the tax excise rate by almost $30/litre of alcohol. Other companies have introduced or are looking to introduce similar products, although the Federal Government has indicated that they will explore methods to close the loophole in the current legislation.

Independent Distillers reported at the time of launching ‘Bolt’ that the drink was simply being produced to highlight the anomalies in the system.

Following a Board decision earlier this year, the WFA wrote to the Federal Treasurer and Minister for Health highlighting opposition to this practice by alcopops manufacturers. On 17 June this year, WFA put out a joint media release with the Australasian Associated Brewers condemning the practice of manufacturing these types of products and stating a commitment to work with the Government to ensure any loopholes are closed as soon as possible.

“Wine, beer and spirits are taxed at different rates in almost every jurisdiction in the world and there has never been any evidence presented to suggest this has a detrimental impact in terms of public health,” WFA Chief Executive Stephen Strachan said. “That alcopops are taxed at the same rate as spirits in Australia is a matter for the alcopops manufacturers, but to use this as an excuse for calling for a tax increase on wine is disingenuous.”

A change to the way wine is taxed and a tax increase on wine would impact thousands of jobs in regional Australia, the WFA claim, indicating that wine is a product and an industry that is fundamentally different to that of spirits. “It is produced to be consumed in moderation with food and the industry is the backbone of many regional communities around Australia with a strong tourism affiliation,” the WFA added in a statement. “The Australian wine sector acknowledges that some consumers abuse their products and is committed to making sure we do everything we can to produce, promote and sell our products in a responsible manner.”

“Our members are proud local producers of quality wines – we are not in the business of manufacturing alcopops. The alcopop manufacturers should focus on their own products and leave the wine sector to its business,” Mr Strachan concluded.