Wine tax reform needed to unwrap red tape strangling struggling industry
The wine tax and its accompanying rebate are outdated and they distort the Australian wine industry. The tax is encouraging the production of cheap wines resulting in oversupply at a time when the industry is struggling to compete internationally. While Australian wine drinkers might not care too much about drinking non-premium wine, this comes at the expense of Australia’s reputation as a premium wine producer to overseas markets.1 The wine tax was originally established in 1930 as a wholesale sales tax, at a rate of 2.5%. Over time, it was repealed and then reintroduced, steadily increasing to 41% by 1997. With the advent of the 10% GST in 2000, the wine tax was reduced to 29% (and renamed as the wine equalisation tax (WET)) so as not to alter the overall tax burden. Australian producers (and New Zealanders) can claim an annual rebate off the wine tax of up to $500,000.
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