Should wine tax be changed?

With the Turnbull Government’s first Federal Budget coming up and much discussion about taxes, there is once again intense debate about whether the wine tax should be changed. And if so, how.

One aspect of the current wine tax regime is the Wine Equalisation Tax (WET). One thing most observers agree is that the apparent widespread rorting of the WET rebate should be stopped.

But how exactly is the system being rorted?

Peter Martin, the Sydney Morning Herald economics writer, published this piece some time ago. It is a typical Peter Martin, clear, concise, sensible piece of writing – all too rare among economics writers.

It says, in part:

… Winegrowers are also able to claim multiples of the rebate limit by entering into partnerships. The paper gives an example of “Jack, John and Jill” who each have a one-third interest in four companies. Each company acquires grapes from the same source and processes them in the same factory but, because none of the trio control any of the companies in their own right and none of the companies control each other, they are each able to claim up to $500,000 in rebates, a total of $2 million …

http://www.smh.com.au/business/wine-equalisation-tax-rebate-widely-rorted-treasury-says-20150820-gj4075.html

 

4 thoughts on “Should wine tax be changed?”

  1. Kate Loughton says:

    Ah the ghastly WET tax. Whilst I was ignorant of the rorting (though unsurprised) that tax is certainly passed on to consumers. Why not tax by percentage alcohol as they do in the UK and many other countries, if they must tax at all. I agree with Lars though that GST was supposed to do away with all this. I give you stamp duty! UGH.

  2. Jorg Gartelmann says:

    When the GST was introduced, the promise was that in return all wholesale Tax would be abolished
    then someone realized this was a cash-cow the government did not want to loose, so instead of a 20% (I think) wholesale tax, they introduced a 29% Wine Equalization tax (meant to be equal to what they received, but obviously was an increase)

    why then not have a Tyre Equalization Tax, and a Car Equalization tax – the whole country would be in an uproar !!

    each industry should be taxed the same

  3. Lars says:

    Why should there be any tax on alcohol at all? We already have GST. Other countries such as Germany don’t have a wine tax. If the goal is to minimise binge drinking, I am not convinced that a tax on wine is an effective solution.

  4. Ian Sutton says:

    WET RORTERS MAKE IT EASIER FOR THE GOVT TO LEVY HEAVY PUNITIVE TAX

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