Wine industry concerned about rumoured tax hikes

Posted by Isobel Drake on 11th May 2009

With speculation rife that beer and wine will be subjected to tax hikes in the upcoming budget, the Australian Winemakers Federation has expressed fears about the future for the sector.

CEO Stephen Strachan said that tax increases would cause a substantial loss of jobs as the industry continues to struggle with a glut.

“There is concern in the industry that the Government will move in the forthcoming Budget to increase the tax on wine, or to look at a change in the way wine is taxed,” hetold ABC radio over the weekend. “And a lot of that speculation is driven by the failure of the RTD (ready-to-drink) legislation to go through the Senate a few weeks ago.”

“What we are reminding Government of is that the initiation of that RTD legislation was very much about, around binge drinking and youth binge drinking and in the case of the wine industry we just do not have a profile in that part of the market.”

Mr Strachan suggested that a wine tax increase would “be targeting the wrong part of the industry” and would force a downsize of the sector.

“If the tax came in at the rate that the beer industry is taxed at the moment then we would look at about 5,300 jobs being stripped out of the wine industry and out of the regional communities where we operate,” he said.

Penfolds’ winemaker and consultant, John Bird, who has seen the recent launch of the 2004 Grange prove a success, believes it is not all doom and gloom, however.
“People still seem to turn up and buy the good wines; they keep coming,” he told the ABC. “I mean I spend a lot of time here at Magill of course, and there’s forever people pulling up in that car park out here, coming in here, tasting and buying. So people still must eat and drink, especially good food and good wine.”