Australians call for wine tax clampdown11th July, 2014 by Gabriel Stone
Australian winemakers are calling on their government to close a tax loophole that is allowing competitors in New Zealand to claim around AUD$25 million (£13.7m) in annual rebates.
Originally set up as a tool to support smaller domestic producers, Australia’s wine equalization tax rebate allows winemakers to claim back up to $500,000, based on the wholesale price of their wine.
However, as reported by The Australian, a trade treaty has enabled New Zealand wine producers to access this rebate too, with the paper warning that other exporters to the country may also be eligible if they register for Goods & Services Tax (GST), a 10% levy that is charged on most good or services sold in Australia.
According to the New Zealand Winegrowers Annual Report 2013, Australia represents the country’s largest export market by value, worth NZ$373m (£192m) last year.
Between 2005 and 2012, New Zealand winemakers received AUD$99m, with data for 2011/12 showing that a total of 205 New Zealand claimants received a collective $25m in rebate, a $4m increase on the previous year.
Paul Evans, chief executive of the Winemakers’ Federation of Australia, has previously highlighted this loophole as a key obstacle to the country’s effort to remain competitive in a global marketplace.
Outlining this wider strategy in May, he noted: “This plan recommends responsible reform to the WET rebate to ensure it continues to deliver its original policy intent of supporting small and medium wine businesses and regional communities.”
Arguing that such a step represented “an opportunity for reform the Federal Government must not delay further”, Evans claimed: “Taking this measure alone would provide significant annual savings of at least $25 million to the Commonwealth which could help fund the additional marketing activities we need in the wine sector to re-engage global consumers and recapture market share.”