11/05/2004 - 22:00

Industry disputes WET relief

11/05/2004 - 22:00

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WHILE it appears that the State’s wine industry has secured a windfall with an increased wine equalisation tax rebate in this week’s Federal Budget, Leeuwin Estate chairman and long-time critic of WET, Denis Horgan, is disappointed the Government has not

Industry disputes WET relief

WHILE it appears that the State’s wine industry has secured a windfall with an increased wine equalisation tax rebate in this week’s Federal Budget, Leeuwin Estate chairman and long-time critic of WET, Denis Horgan, is disappointed the Government has not adopted a volumetric model.

Mr Horgan has spent more than four years crusading against WET, claiming it penalises small premium wine producers because the system is based on dollar values rather than volumes. 

Wine producers are taxed 29 per cent of the wholesale domestic wine price.

In the budget, Treasurer Peter Costello claimed the changes would exempt 90 per cent of Australia’s wine producers from WET.

The Commonwealth will rebate up to $290,000 of WET to all wineries on the first $1 million in sales.

But basing the rebate on dollar values will not solve financial burdens faced by smaller wine producers, Mr Horgan told WA Business News.

“It shows that the treasurer doesn’t understand this industry,” he said.

“The most significant benefit of this will go to the majors.”

Watershed Premium Wines managing director Geoff Barrett said the changes merely increased the current tax-free threshold and represented just 10 per cent of the relief that the industry was seeking.

“All they’ve done is increased the threshold from $600,000 to $1 million for WET. It’s still there, they’ve just marginally increased the amount for the threshold,” Mr Barrett said. 

“It’s about a 50 per cent increase in relief from what’s already there but it’s only 10 per cent of what the industry is seeking.”

Mr Costello said the rebate would replace current cellar door rebates and reduce tax on the industry by $338 million.

Australian Wine Holdings executive chairman Mike Calneggia said measuring producers on sales rather than volumes would help stabilise retail prices.

He said if the tax was based on volume there was a risk that some producers would slash retail prices and place additional financial pressures on small and medium sized wineries.

“It’s not a bad way to protect the price pressures from retail,” he told WA Business News.

Mr Costello also announced that the duty-free concession for alcoholic beverages would increase from 1.125 litres to 2.25 litres.

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