AFFW joins Australia’s wine tax battle

Australia’s First Families of Wine has joined a national industry push to protect wine producers from a tax increase that it claims would jeopardise the country’s ability to compete globally.

Australia’s First Families of Wine

The AFFW collective features some of Australia’s most high profile wineries: Yalumba, Campbells, D’Arenberg, Henschke, McWilliams, Tyrrell’s Wines, Taylors’ (known as Wakefield in the UK), Jim Barry Wines, Brown Brothers, Tahbilk, Howard Park and De Bortoli Wines.

The move comes as the Australian government comes under increasing pressure from health bodies to raise wine tax to a similar level as beer and spirits. At the moment most wine is taxed at 8 cents per standard drink, while draught beer faces a 30 cent levy and spirits are taxed at 95 cents.

A report earlier this year from the Australian National Preventative Health Agency called for this gap to be narrowed, arguing: “When the price affordability of one product over another appears to be partially as a result of a distortion in the market due to government revenue measures, consideration of reform becomes a public health issue.”

The report drew a direct link between wine’s favourable tax status and a resulting greater risk of alcohol abuse, claiming: “Preferential treatment of wine, particularly at the lower value end, is likely to be contributing to social and health harms.”

However, AFFW chairman Mitchell Taylor highlighted the structural differences between the wine industry and other alcoholic drink sectors as he stressed the importance of maintaining a lower tax levy.

“As a sector based predominately around small and medium-sized businesses in regional Australia, we cannot be taxed similarly to highly profitable foreign beer and spirit companies,” remarked Taylor.

In addition, he noted: “Wine confronts unique commercial challenges such as high capital intensity and long lead times between when costs are incurred and revenues come in – we don’t just crush, bottle and sell a vintage overnight, it takes time.”

Finally, argued Taylor, “Australia needs to be globally competitive yet we are already one of the highest taxed wine-producing countries in the world today and something has got to give.”

As a result, he confirmed the AFFW’s support for a wider campaign by the Winemakers’ Federation of Australia, saying: “We are standing up for Australian wine as we get ready for the federal government’s review of taxation, its next budget and another federal election on the horizon.”

Welcoming this news, WFA chief executive Paul Evans said: “Thanks to the generosity of Australia’s First Families of Wine, the Federation will broaden its significant work program ahead of the forthcoming federal tax review and 2015 budget.”

He noted that, thanks to support from the Wolf Blass Foundation, steps were already “well underway” to reform the country’s Wine Equalisation Tax, which currently contains a loophole allowing foreign competitors to claim back millions of dollars in rebates designed to help smaller domestic producers.

Looking ahead to the organisation’s future efforts in this area, Evans explained: “The next step is commissioning specialist independent analysis that will look at the broader tax picture and have it underpin our submissions to government in advance of its tax review and next budget. Thanks to Australia’s First Families of Wine, this next body of work will get underway in earnest.”