September 2011
Wine industry stands behind tax status quo
The Supporting Australian Wine industry group today called for a rational approach to industry restructure that is inclusive rather than exclusive.
This group includes major industry players Australian Vintage Ltd, Accolade Wines and Casella Wines, and is strongly supported by the Winemakers Federation of Australia medium and small Winemakers committees, the Murray Valley WineGrowers Council and other grower and worker groups.
The Winemakers Federation of Australia’s medium sized forum includes such iconic family wine companies as McWilliams Wines, Tyrrells Vineyards, Yalumba, Taylors Wines, Brown Brothers and Tahbilk Wines.
All believe that a change from an advalorem to volumetric tax will be devastating to the Australian Wine Industry and the regional economies spread right across Australia which rely on the industry for their survival.
The group is making a submission to the forthcoming tax forum in support of the status quo on wine tax.
Casella Wines managing director, John Casella, said that proposals to switch tax formats and remove the Wine Equalisation Tax (WET) Rebate would cause the closure of dozens of regional wineries, forcing job losses and, ultimately, the forced sale of family vineyards.
“The WET rebate needs to be reviewed to close loop holes, but it should not be abolished because it is doing its job. It is supporting small winemakers and supporting diversity in the wine industry. The proposal to remove the WET rebate will impact on the diversity of the wine industry, a key strength of the industry, and also impact regional economies which rely on the jobs created by small wineries and the tourist business they draw to regions,” Mr Casella said.
“For many small wineries and grape producers, the land they cultivate provides not only their livelihood but their only significant asset, providing security in retirement and a future for their family.”
Australian Vintage chief executive, Neil McGuigan, said the switch to a volumetric tax would effectively increase the cost of accessible mainstream wines while reducing the cost of high-end premium wines.
“It’s interesting logic, to push a scheme that puts up the cost of mainstream wines, that most consumers buy - allegedly as a means of reducing an industry oversupply situation,” Mr McGuigan said.
“Under a volumetric tax we will certainly change the Australian wine industry, but in a negative way that will see regional winemakers going broke, regional jobs and family vineyards disappearing and more Australian wine being sold at unsustainable prices into international markets as companies struggle to survive.
“Introducing a volumetric tax will have impacts beyond domestic sales and consumption,” Mr McGuigan said.
“As it will affect sales of mainstream wines it will affect the economies of scale of Australian wineries and impact our ability to compete effectively in tough international markets.
“Given the strength of the Australian Dollar in key export wine markets, like the UK and US, even small increases in wine costs will significantly reduce Australia’s export competitiveness and will also impact Australia’s ability to compete in emerging markets like China.
“The Australian wine industry is going through a process of painful change at the moment – we planted too many grapes when export markets were taking off and now we are struggling with a high dollar and stiff competition in international markets.
“The situation is turning around, there are many more vineyards being pulled out than are being planted, grapegrowers are switching businesses or crops and winemakers are looking at new markets,” Mr McGuigan said.
He said Victorian Department of Primary Industry figures showed that in the Murray Valley and Swan Hill region the grape crush was down 20% in 2011 compared to the previous season.
The South Australian Department of Primary of Industries reported a similar trend in the Riverland (Australia’s largest grape growing area) noting a reduction by 4,306ha (17%) of irrigated grapevines between July 2007 and January 2011.
“The proposal to switch to a volumetric tax will plunge the industry into catastrophic change that threatens tens of thousands of jobs in wine producing regions across the country and will destabilise wine businesses when they most need to focus on business strategy in order to survive,” Mr McGuigan said.
Representative of one of Australia’s largest grapegrower groups, Murray Valley WineGrowers, Mr Mark McKenzie, warned that a volumetric tax would have an absolutely devastating impact on inland winegrape growing regions.
“The Government needs to think very carefully in assessing changes to wine industry tax. They need to think long and hard about whether they want a broad based grape growing industry because this tax will hit 60 percent of the production base,” Mr McKenzie said.
Accolade Wines Chief Executive Troy Christensen said Australia’s wine industry was already facing significant challenges, including access to water, climate change, imported surplus wine and the unprecedented strength of the Australian dollar.
“The industry is facing its challenges and for a real industry solution it needs to work together.”
“Supporting Australian Wine is calling for the retention of the status quo in wine taxation for the sake of jobs, Australia’s wine industry and our regional communities.’’
“We believe if the WET rebate is being rorted it should be tackled through the appropriate channels, via a tax office crackdown, rather than turning the industry on its head.”
For more information contact:
Accolade Wines
Anita Poddar, National PR Manager 08 8392 2298
Australian Vintage Limited
Neil McGuigan, CEO 0428 687 259
Casella Wines
Kate Bradley, Communications Manager 02 9330 4721
McWilliams Wines
Doug McWilliam, CEO 0409 469 607
Murray Valley Winegrowers
Mark McKenzie, CEO, 0412 075 245
Taylors Wines
Mitchell Taylor, CEO 0415 640 640
Tyrrells Vineyards
Bruce Tyrrell, CEO - 0417 259 466
Yalumba
Robert Hill Smith CEO 08 85 613 200
www.supportingaustralianwine.com.au