Govt says no to new wine tax

THE wine industry's peak body has welcomed the Federal Government's decision not to impose a volumetric tax on wine.

Many within the wine industry had expected the Government to accept a recommendation in the Henry tax review to introduce the volumetric tax.

But as part of its response to the review outlined yesterday, the Government announced it would leave the current Wine Equalisation Tax in place.

Introducing a tax on the volume of wine, rather than on its value, would have resulted in the price of cask wine and cheap bottled wine increasing significantly.

The Winemakers' Federation of Australia said the Government had shown ``courage'' in rejecting the  proposal to replace the WET with a volumetric tax system.

"It would have been an easy option to go for raising more revenue and appeasing a few vested interests, but it would have been illogical, unfair and dangerous," chief executive Stephen Strachan said.

"Unnecessary change would have devastated the wine industry at a time when it is dealing with its toughest period in more than two decades."

Mr Strachan said the WFA's modelling had shown that taxing wine in the same way as packaged beer, and removing the WET rebate, would have seen 95 per cent of all wine increase.

It would also have led to sales volumes falling by 34 per cent, 29,000ha of vineyards becoming redundant and about 12,000 jobs being lost.

"Most of those jobs would be in regional areas where wineries are crucial contributors to tourism and thus to economic development,'' Mr Strachan said.

He said support for the existing wine tax system recognised the reality that wine was different from other forms of alcohol in the way it was produced, marketed and consumed.

"Wine is usually drunk in moderation by older adults and most commonly with food,'' he said.

"It would be ridiculous to make ordinary Australians pay up to four times more to enjoy a glass or two of wine with dinner because we are concerned about binge drinking.

"We don't deny that alcohol misuse is a problem, but we have to target the causes not make ordinary Australians pay because we cant think of any better solutions."