By Andy Young

While the government stopped short of wholesale changes to Australia’s alcohol beverage taxation, the Treasurer did announce some changes to the Wine Equalisation Tax (WET), which have received a mixed reaction from the wine industry.

Treasury Wine Estates (TWE) and Pernod Ricard Winemakers welcomed the WET reforms, but medium and small wineries have raised concerns over the reduction of the rebate cap.

Treasurer Scott Morrison announced that the rebate eligibility criteria will be tightened from July 1, 2019. He also said that $500,000 rebate cap will be brought down to $350,000 by July 1, 2017 and to $290,000 by 2018.

Mitchell Taylor, managing director of Taylors Wines and chair for medium winemakers for the Winemakers' Federation of Australia, raised concerns over the reforms.

"These changes have taken too long, and that the WET rebate restrictions will not take effect until July 2019 is yet another delay," Taylor said.

"For the WET rebate, the government has not taken action against New Zealand wineries tapping into the rebate scheme. More than an estimated $300 million from 2013-2014 of tax payer dollars was claimed and given back to New Zealand producers. To create a level playing field for domestic producers, I feel very strongly that this should be abolished."

Taylor added: "The reduction of the rebate cap is also a point of concern, as the reduction of credits from $500k down to $290k in 2018 will have major impacts on those genuine medium and small wineries who depend on the WET rebate to re-invest into their businesses and employees."

One wine industry insider told TheShout that he had spoken to several mid-sized wineries this morning and said the reaction was one of total disbelief, as many factor in the rebate to stay operational.

Angus McPherson, TWE’s managing director for ANZ welcomed the WET reforms.

“TWE welcomes the Government’s decision to reform the WET Rebate and to strengthen the integrity of the tax. These reforms are consistent with the Rebate’s original intent and will help address the distortionary aspects of the current system which have done so much damage to the Australian wine industry.

“Having waited several years for meaningful change on the WET Rebate it is crucial that we now get on with the job of implementation. Whilst a short transition period makes sense, we encourage the Government to move quickly to enact these reforms.”

Kate Thompson, Legal, Corporate Affairs and Communications Director for Pernod Ricard Winemakers added: “The increased marketing funds to grow international demand for Australian wine is timely, with exports of premium wine growing at record rates, supported by recently signed Free Trade Agreements (FTAs). 

“However, this is an area where the devil really is in the detail, and we look forward to working with Government to ensure the principle of tighter eligibility for the Rebate is delivered in practice.”

As well as the WET changes, the government also announced plans to extend the excise rebate scheme to Australian distillers and a $50m investment in Australia’s wine export and wine tourism.

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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