22 Jun 2015

Australians pay high rates of tax on wine, as they do on all alcoholic beverages. Just how high these tax rates are can be seen here in a chart (from a discussion paper released by the Treasurer, Joe Hockey) :




It's the wine part that interests me, as well of a large number of industry players at the moment. The chart shows that the tax on a glass of cask wine is very low (around five cents) while the tax on a glass of wine from a bottle costing $50 is much higher (about $1).
This discrepancy comes about because wine is taxed ad valorem not on a volumetric basis. Under a volumetric tax, the amount of tax payable would be based on the number of standard drinks. It's an emotional issue with plenty at stake--the industry heavyweights from beer and spirit companies are piling on the pressure to see wine taxed in the same way their products are--that is, by the alcohol content, regardless of whether it's cask wine or the product of a boutique vineyard. If we went this way, it's likely that Squitchy Lane wines would become cheaper while cask wines would likely double in price. This debate isn't going away for a while yet, so I will keep you posted. In the meantime, keep reading to see how our tax burden compares to that in other wine-producing countries:

From a Business Insider article from May 5 this year, written by Paul Evans:

"Analysis commissioned by the Winemakers’ Federation of Australia shows Australia’s 29% WET on premium wines (eg $12 rrp) are one of the most highly taxed. To compare, France has 0.8%, Italy 0%, Spain 0%, Argentina 0%, Chile 15%, South Africa 3.8% and the United States 6.6%.

If we express this as 22 cents per standard drink, it doesn’t get any better. While it’s just under New Zealand which is 26 cents, it’s zero in Argentina, 3 cents in South Africa, 5 cents in the United States, just 1 cent in France and zero in the other Old World wine-exporting countries".

No wonder you love that cheap red from the Languedoc that you drank on your last holiday in France!