Federal Budget leaves alcohol tax alone

Posted by Isobel Drake on 14th May 2009

The Winemakers’ Federation of Australia (WFA) has welcomed a decision by the Federal Government to resist increasing the tax on wine in the Budget released on Tuesday night. In the lead up to the Budget there had been reports of a tax hike for both beer and wine, but both were left alone as the Government continues to push their alcopops levy. The Government did, however, include a change to the definition of beer, designed to stop beer or wine-based “alcopops” being produced.

“Given the pressure they were under it would have been easy to fall back on the old mainstay of hitting predictable targets to raise money without considering the logic of such a move or the long-term consequences,” WFA Chief Executive Stephen Strachan said. “Any change would have undermined the Government’s own tax inquiry. Having said it wants all tax matters to be dealt with as part of the Henry Review, it would have made no sense to make changes before the review is completed.”

Mr Strachan said it was important that the Henry Review also resisted pressure to make inappropriate changes to wine taxation.

“The current system is well established and well understood and our industry makes a very significant contribution to Government revenue – our wine taxes are among the highest in the world,” he suggested “We have made it clear to the Government that to make changes to that system would be counterproductive as the wine industry struggles to cope with the toughest conditions in two decades.”

“We have also argued strongly that wine is very different to other alcoholic drinks in the way it is produced, purchased and consumed and this has to be recognised.”

Beer definition

The Government announced that, from July 1, beer will be defined by its level of bitterness and the addition of sugar, artificial sweeteners or spirits may result in beverages being taxed as spirit-based products. This has caused concern amongst some makers of fruitier beers, although it is expected to mainly deal with products which are made with high levels of added sugar to appeal to alcopop lovers while escaping the alcopop levy.