South Africa: Wineries welcome excise tax change

Waitaki winegrowers are welcoming legislation changes that give smaller wineries more time to make their excise tax payments.

From July 1, wineries with a tax liability of $50,000 or less a year will be able to pay their excise tax annually rather than monthly. Previously the threshold was for less than $10,000 of tax.

Those with tax to pay of between $50,000 and $100,000 can pay six-monthly, while the biggest wineries will continue to pay each month.

The Government announced the changes yesterday, which it hoped would improve cashflows and reduce compliance costs.

Waitaki Valley Winegrowers Association chair Jim Jerram said it was "definitely an advance in the right direction".

"We have to be pleased with it. [We were] often paying excise before a bottle's been sold."

The changes would affect all winegrowers in the Waitaki Valley, he said.

Excise payments were costing winegrowers the equivalent of $2 a bottle, he said. The changes would free up money for the businesses.

"It keeps that money in circulation, which smaller wineries desperately need right now."

A winery that was paying $50,000 excise would be selling around 25,000 bottles, which was only "boutique" size, he said.

Waitaki MP Jacqui Dean said the changes would help businesses cover administrative costs and better balance cash flows.

"Some wineries in our region are struggling in these tough economic times. These changes will save both time and money, and could mean the difference between staying in business or going bust for some wineries."

Acting Economic Development Minister David Carter said the wine industry was a $1.1 billion export earner for New Zealand and a "vital contributor to our regional economy".

The changes would reduce the regulatory burden on small producers, he said. "This is not about reducing their tax obligations but about aligning excise payment with revenue flow."

New Zealand Wine Growers' chief executive Philip Gregan said the change would significantly benefit the cashflows for smaller wineries.

He said the wine industry was hit hard by a glut of wine and the global economic downturn which forced prices down.