New Wine Tax Tabled in Australia

September 6, 2011 Taxation in Australia

Tax on wine in AustraliaAustralia needs to change its current tax treatment of alcohol, which now results in boxed wines being sold cheaper than bottled water.

Calls have been raised to change the way that wine is taxed in Australia in order to cut down on the occurrence of excessive drinking, and significantly raise national tax revenues. The proposal was brought forward in a report published on September 5th by the Australian Alcohol Education and Rehabilitation Foundation.

According to the authors of the report, the amount of taxes on wine should be based on the level of alcohol in the drink. Currently, Australia’s tax system for the sale of wine is based on the sales price of the product. The proposed change would bring the taxation of wine in line with the taxes currently instated on the sales of all other spirits. It is projected that the proposal would see an extra AUD 1.5 billion in tax revenues raised every year. In comparison, Australia’s newly introduced carbon tax system is estimated to raise AUD 6 billion per year. Aside from the significant tax benefits, the change will also lead to a noticeable cuts in healthcare costs associated with alcohol abuse stemming from the availability of cheap wine.

Commenting on the suggestions contained in the report Michael Thorn, chief executive of the Alcohol Education and Rehabilitation Foundation, also called for the government to reduce subsidies and tax benefits for wineries. which will further improve the country’s fiscal position. He said that the current tax treatment of the wine production sector encourages a focus on volume and not quality. He added that similar tax changes have been recommended by previous independent tax reviews, and the issue needs to be brought up at the upcoming Australian tax summit.

Photo by Jaymi Heimbuch