Possible WET Reform?

[Diddy]

http://mobile.news.com.au/finance/small ... 7219430090

[rooman]

The WET regime is the most insane tax regime on wine in any wine producing country world wide. It makes no sense and should be completely abolished. Part of the agreement regarding introducing GST was that these ridiculous taxes including taxes like stamp duty on houses and cars should be abolished. No one really knows why the WET regime was introduced in the first place. Some say it was forced through by the breweries to protect beer sales. Whatever the reason all respectable wine consumers should start writing to their locL MP urging its total repeal.

[Sigmamupi]

"While the New Zealand wine producers get the rebate, they don’t pay the tax in the first instance, and as such, it’s not a rebate but a subsidy, he argues."

Apparently this grandstanding is too stupid to understand that NZ wine pays WET when it is imported into Australia and it is only this wine that is eligible for the producer rebate.

[Diddy]

I know Jeremy Oliver has been particularly vociferous in his condemnation of the WET. There's a really good explanation on his website here:-

http://www.onwine.com.au/tax-reform-and ... lian-wine/

[phillisc]

Bit like LCT me thinks...objective to protect motor vehicle manufacturing...which Australia will no longer have.

Cheers
Craig

[pstarr]

The WET regime is the most insane tax regime on wine in any wine producing country world wide. It makes no sense and should be completely abolished. Part of the agreement regarding introducing GST was that these ridiculous taxes including taxes like stamp duty on houses and cars should be abolished. No one really knows why the WET regime was introduced in the first place. Some say it was forced through by the breweries to protect beer sales. Whatever the reason all respectable wine consumers should start writing to their locL MP urging its total repeal.

That Oliver piece is terrible. Riddled with errors. The history of the WET and then the WET rebate isn't that complicated. The WET was introduced because of possible perverse outcomes from removing wholesale sales taxes and replacing them with a single GST. Because different alcoholic beverages had different levels of wholesale sales tax applied to them (such as comparing beer to wine), if all of these were removed and replaced with one GST, the relative price of different alcohols could change. Wine would become cheaper, in relative terms, and that was seen as possibly encouraging more alcohol consumption, which was not intended. So WET came in to maintain relative alcohol pricing. Or beer profits.

The NZ stuff is so much self-serving tosh. Paying WET and then getting a rebate is hardly the reason NZ SB is a dominant wine in the Australian market. Customers want it. And what is the alternative? Tear up the Mutual Recognition arrangements with NZ? For what national benefit?

[Polymer]

Wine would become cheaper, in relative terms, and that was seen as possibly encouraging more alcohol consumption, which was not intended. So WET came in to maintain relative alcohol pricing. Or beer profits.

But wouldn't it make more sense to tax based on alcohol content then? Rather than the value of the wine?

A 5 dollar wine at 15% alcohol has more alcohol than a 100 dollar bottle at 13%. And it is hardly going to be common that people are going to get pissed on a 100 dollar bottle of wine on a regular basis vs. the 5 dollar bottle or cask wine...

If you're going to make a sin tax, it should be taxing the sin. Eg. Tobacco taxes the tobacco, not how much you're going to charge for it...

These numbers might not be right but I think Australia consumes something like 500 million liters of wine a year.
WET revenue is 700-800 Million and the rebate is like 230 million. So basically 500ish million in net revenue from WET. Get rid of the rebate and have a 1-2 dollar Alcohol tax per liter based on alcohol% or just in volume as long as it falls between a certain range. That does exactly what you want (discourages over consumption) by making the super cheap alcohol slightly more expensive compared to what is happening now and it still protects your coffers...Or keep the rebate and push it more towards 2/bottle...either way, it does what you want, it taxes the sin (which is what this is supposed to be) and fills the coffers. Some side benefits such as making it harder for junk wine places to rip off the system or flood the marketplace are just extra benefits...

I was going to write a bit more about the protectionism and big boy pants...but nevermind...

[maybs]

I was going to write a bit more about the protectionism and big boy pants...but nevermind...

[Sigmamupi]

[/quote] But wouldn't it make more sense to tax based on alcohol content then? Rather than the value of the wine?
..[/quote]

Allow me a little political history, particularly as the writings of Jeremy Oliver have a number of errors. A volumetric tax was an option at the time of the lead up to the release of the Howard Government's GST plan ("Tax Reform: Not a New Tax, a New Tax System") in August 1998 but an unholy alliance of South Australian politicians of both stripes and the Winemakers' Federation (President Brian Croser) successfully got that government to agree to keep a value based tax (WET as well as GST) to replace the sales tax on wine. These hypocrites then complained about the effect on small and medium wineries. Treasurer Costello introduced the producer rebate in 2004 to try to ameliorate the effect of the problem he had created. If you look at the recommendations of December 2009 Report to the Treasurer on "Australia's Future Tax System" you see that a volumetric tax on all alcohol was a recommendation. Treasurer Swan didn't take this up for some spurious reason. Basically you can blame the mess on Treasurers Costello and Swan, aided by the Winemakers' Federation. None of them gives the proverbial rat's posterior about consumers.

[dingozegan]

If you're going to make a sin tax, it should be taxing the sin.... Get rid of the rebate and have a 1-2 dollar Alcohol tax per liter based on alcohol% or just in volume as long as it falls between a certain range. That does exactly what you want (discourages over consumption) by making the super cheap alcohol slightly more expensive compared to what is happening now and it still protects your coffers...Or keep the rebate and push it more towards 2/bottle...either way, it does what you want, it taxes the sin (which is what this is supposed to be) and fills the coffers. Some side benefits such as making it harder for junk wine places to rip off the system or flood the marketplace are just extra benefits...

Exactly.

I was going to write a bit more about the protectionism and big boy pants...but nevermind...

Nevermind? That's disappointing

[odyssey]

But wouldn't it make more sense to tax based on alcohol content then? Rather than the value of the wine?

A 5 dollar wine at 15% alcohol has more alcohol than a 100 dollar bottle at 13%. And it is hardly going to be common that people are going to get pissed on a 100 dollar bottle of wine on a regular basis vs. the 5 dollar bottle or cask wine...

If you're going to make a sin tax, it should be taxing the sin. Eg. Tobacco taxes the tobacco, not how much you're going to charge for it...

This. A hundred times over. Anything else is just pure unadulterated self-interest and greed.

[rossmckay]

But wouldn't it make more sense to tax based on alcohol content then? Rather than the value of the wine?

A 5 dollar wine at 15% alcohol has more alcohol than a 100 dollar bottle at 13%. And it is hardly going to be common that people are going to get pissed on a 100 dollar bottle of wine on a regular basis vs. the 5 dollar bottle or cask wine...

If you're going to make a sin tax, it should be taxing the sin. Eg. Tobacco taxes the tobacco, not how much you're going to charge for it...

This. A hundred times over. Anything else is just pure unadulterated self-interest and greed.

No votes in bottles of wine. Cask wine, beer and smokes is where the votes are. Everybody knows only wankers drink wine over $10 a bottle.