Alcohol Rehab group calls for Wine Equalisation Tax reform to cut mass-produced wine

 The Alcohol Education & Rehabilitation Foundation (AER Foundation) has slammed the Wine Equalisation Tax, saying it makes “no sense,” and is calling for an urgent reform.

The AER Foundation said today the tax will be at the detriment of the economy, wine industry and health of Australians.

The report “Alcohol Taxation Reform – Starting with the Wine Equalisation Tax”, produced by
leading economic consultants the Allen Consulting Group, and commissioned by the AER
Foundation, concluded that the current tax structure contributes to the Australian wine glut
by rewarding producers of cheap, poor-quality wines and propping up inefficient producers.

According to the report, the rebates are costing Australian tax payers at least
$250 million a year.

Wine Federation of Australia estimates $50 million of that is being rorted by retailers, who are exploiting WET loopholes.

AER Foundation chief executive, Michael Thorn has called for urgent reform of the WET.

“The current tax arrangement doesn’t make economic sense, it doesn’t make sense for the
health of Australians, and it doesn’t make sense for the wine industry,” Thorn said.

“Over the last decade, eight reviews including the 2010 Henry Review into taxation found the WET
to be inequitable and it’s about time the Australian Government did something to reform this
tax.

“The report shows that wine benefits from the current tax arrangements by up to $1.5 billion
a year by not being taxed in the same way as comparable products like full strength packaged
beer.

Thorn believes rethinking the policy would be a step in the right direction to reduce alcohol-related problems in Australia.

“Reform could also reduce the consumption of pure alcohol by between four and 16 million
litres per year, lessening the likelihood of costly alcohol-related diseases and social problems,” he said.

“This would reduce the harms and the cost to the community caused by dirt-cheap mass-produced wine.”

“Allen’s report points out that targeted reform can put a stop to the current taxation arrangements that punish the domestic industry for producing quality wines and domestic patrons from consuming them.”

“The Treasurer is using the wine glut as an excuse to avoid reforming the tax system, when
this is precisely what is needed to resolve the glut.

“The upcoming Tax Forum provides the Government with an opportunity to address both the bad tax and industry problems associated with the oversupply of cheap, poor-quality wines.

The AER Foundation will officially launch the report this morning at Parliament House in Canberra.

Kerry Barwise of the Allen Consulting Group will present the findings.

The “Alcohol Taxation Reform – Starting with the Wine Equalisation Tax” Report can be
accessed here.

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