POLL Federal Budget's WET reform

[Sean]

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[Michael McNally]

Some of the moves seem sensible to me. Not sure why we provide a rebate to our brothers and sisters over the dutch, but I guess we tax them too......

Cheers

Michael

[JamieBahrain]

I had a moment of clarity with Australia's complicated taxation system when I bought a case of Grange. For half the local retail price, the Grange went from Australia, to the UK, to HKG and then carried back into Australia tax free under the DF allowance.

[Sean]

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[rooman]

The entire Wine Equalisation Tax and Rebate should be a source of major embarrassment to every Australian that has ever purchased a bottle or glass of wine. There are NO legal or economic justifications for the tax other than self interested lobby groups.

We like to think of Australia as some form of bastion of liberal capitalism deep in the Pacific Ocean and yet act in a manner that is more consistent with Stalin's USSR in the 1950s. Bar a couple of fringe dwelling countries up by the Arctic, no other wine producing country in the world has such an offensive tax as WET.

There are definitely days when I wish we could sack the entire Parliament and just adopt the tax structure that has been developed over in NZ. They have no WET, no stamp duty on houses or cars, no Luxury Car Taxes, no CGT and a top tax rate of 33%. Our politicians on the other hand are just self-interested underachievers who couldn't run a local 7/11.

Mark

[Sigmamupi]

Some of the moves seem sensible to me. Not sure why we provide a rebate to our brothers and sisters over the dutch, but I guess we tax them too......

Cheers

Michael

We happen to have a treaty called Closer Economic Relations (CER) with them.

[Sean]

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[Sean]

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[Matt@5453]

hey Sean have a read of this for some back ground:http://treasury.gov.au/~/media/Treasury/Consultations%20and%20Reviews/Consultations/2015/Wine%20Equalisation%20Tax%20Rebate/Key%20Documents/PDF/WET_Rebate_Discussion_Paper_2015.ashx
I think the reform is a good thing. Legitimate businesses will survive this. Reform and definitions will take some time, but is about time some of the 'dodgy' operators were put on notice, the industry needs a real 'clean up' and some of the crap bulk wine hitting the market (due to the current rebate) being stopped from entering the market in the future.

[GraemeG]

The entire Wine Equalisation Tax and Rebate should be a source of major embarrassment to every Australian that has ever purchased a bottle or glass of wine. There are NO legal or economic justifications for the tax other than self interested lobby groups.

We like to think of Australia as some form of bastion of liberal capitalism deep in the Pacific Ocean and yet act in a manner that is more consistent with Stalin's USSR in the 1950s. Bar a couple of fringe dwelling countries up by the Arctic, no other wine producing country in the world has such an offensive tax as WET.

There are definitely days when I wish we could sack the entire Parliament and just adopt the tax structure that has been developed over in NZ. They have no WET, no stamp duty on houses or cars, no Luxury Car Taxes, no CGT and a top tax rate of 33%. Our politicians on the other hand are just self-interested underachievers who couldn't run a local 7/11.

Mark

Indeed. It helps that they have only one government to my knowledge, not nine...
Not that NZ is a nirvana, but they've certainly avoided a lot of our mistakes.
GG

[JamieBahrain]

Also I was told the current owner is from China. If that is the case, should a foreign owner get the rebate?

Probably yes if you want foreign investment. And with one in two Australians drawing some sort of government support we are going to need a lot of foreign investment in the future.

[rooman]

The entire Wine Equalisation Tax and Rebate should be a source of major embarrassment to every Australian that has ever purchased a bottle or glass of wine. There are NO legal or economic justifications for the tax other than self interested lobby groups.

We like to think of Australia as some form of bastion of liberal capitalism deep in the Pacific Ocean and yet act in a manner that is more consistent with Stalin's USSR in the 1950s. Bar a couple of fringe dwelling countries up by the Arctic, no other wine producing country in the world has such an offensive tax as WET.

There are definitely days when I wish we could sack the entire Parliament and just adopt the tax structure that has been developed over in NZ. They have no WET, no stamp duty on houses or cars, no Luxury Car Taxes, no CGT and a top tax rate of 33%. Our politicians on the other hand are just self-interested underachievers who couldn't run a local 7/11.

Mark

Indeed. It helps that they have only one government to my knowledge, not nine...
Not that NZ is a nirvana, but they've certainly avoided a lot of our mistakes.
GG

Oh please don't get me started on the insanity of having 9 houses of representatives to run a country for 20m people. Sure it made sense 200 years ago when it took weeks to go from Sydney to Melbourne but in this day and ages with internet, planes and phones, it is insane.

We should move all government to Canberra and use local councils to look after local issues. We don't need 6 police forces or 6 departments of education. The waste is beyond belief.

[Sean]

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[Sean]

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[JamieBahrain]

Thanks Sean,

I don't see a problem there. They are working within the taxation rules and providing Australians ( rural ) with jobs who hopefully fund their own retirement. The exported wines are product ambassadors for Australia driving further Australian produce interest and promoting tourism, which in your example, is over a billion people or 30 million multi-millionaires with massive ancillary benefits in other industries.

The alternative, is possibly an unsustainable winery that takes the grant too. They have a modest $50 pinot which ends in the heavily discounted domestic premium wine lake or flogged off as clean-skins.

We've just spent billions of dollars extra creating submarine jobs, debatably jeopardizing our primary defense deterrent through delay and maybe even the wrong sub. I just don't see the issue with drawing in foreign capital to prop up Australian wineries.

[Sean]

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[rooman]

Like the Emperor's clothing, the one question nobody has asked in respect of the wine equalisation tax is why was It created in the first place.

The shallow answer is that it was some form of replacement tax for the wholesale tax on wine at the time. This however overlooks the entire basis on which the goods and services tax was initially introduced, namely all other such taxes as wholesale taxes would be repealed and replaced by just one GST. Now we have the ridiculous situation where we have those GST and WET on wines.

What the better question is it what exactly are we supposed to be equalising with. The principal reasons I've heard are that it was forced through by the breweries to make wine less attractive at a time when beer sales were under threat.

In this great country of ours we can never underestimate the self interest of producer groups at the expense of consumers.

[Matt@5453]

In this great country of ours we can never underestimate the self interest of producer groups at the expense of consumers.

Why would you not want to protect your interests if you were truly vested in an industry that has threats? An example is our farmers. In some cases if free markets reigned we would not have some local industries. A few extra bucks over the counter (through self protection measures and other measures) helps producers, without it the true cost to society is greater in the long run. I think overall consumers have it pretty good in Australia. I think our competitiveness in regards to wage growth is another issue, but want open that can of worms here.

[rooman]

In this great country of ours we can never underestimate the self interest of producer groups at the expense of consumers.

Why would you not want to protect your interests if you were truly vested in an industry that has threats? An example is our farmers. In some cases if free markets reigned we would not have some local industries. A few extra bucks over the counter (through self protection measures and other measures) helps producers, without it the true cost to society is greater in the long run. I think overall consumers have it pretty good in Australia. I think our competitiveness in regards to wage growth is another issue, but want open that can of worms here.

Leaving aside Australia's stated opposition to your suggested approach as part of the World Trade Organisation, the producers I was referring to are the breweries who apparently convinced government to impose a value based tax on wine to the daily detriment of all Austtalian wine consumers in order to maintain a competitive edge for the sale of beer over wine in this great country of ours.

If you believe that is an appropriate use of government decision making processes then we will never agree on this topic.

[Sigmamupi]

What the better question is it what exactly are we supposed to be equalising with. The principal reasons I've heard are that it was forced through by the breweries to make wine less attractive at a time when beer sales were under threat.

It was a decision made behind closed doors by the then Treasurer Peter Costello in the lead up to the release of the Government's tax reform proposals for the implementation of the GST in 2000 after lobbying by the Winemaker's Federation of Australian (then President was Brian Croser) and South Australian politicians to keep a value based tax on wine rather than a volumetric tax that would have increased the tax on low value wines from places like the Riverland. The rate of Wine Equalisation Tax (WET) rate was designed to maintain the total amount of tax revenue from wine, when added to the GST. Blame the above and no Treasurer has had the guts to do any comprehensive alcohol tax reform since, despite many recommendations for a volumetric tax on all alcohol. The beer industry had little to do with it as they were having their own fight with the Government at that time over the beer excise rates to apply when the GST was introduced.

[GraemeG]

What the better question is it what exactly are we supposed to be equalising with. The principal reasons I've heard are that it was forced through by the breweries to make wine less attractive at a time when beer sales were under threat.

It was a decision made behind closed doors by the then Treasurer Peter Costello in the lead up to the release of the Government's tax reform proposals for the implementation of the GST in 2000 after lobbying by the Winemaker's Federation of Australian (then President was Brian Croser) and South Australian politicians to keep a value based tax on wine rather than a volumetric tax that would have increased the tax on low value wines from places like the Riverland. The rate of Wine Equalisation Tax (WET) rate was designed to maintain the total amount of tax revenue from wine, when added to the GST. Blame the above and no Treasurer has had the guts to do any comprehensive alcohol tax reform since, despite many recommendations for a volumetric tax on all alcohol. The beer industry had little to do with it as they were having their own fight with the Government at that time over the beer excise rates to apply when the GST was introduced.

Yes, although in fairness to Croser (!) he was a bit stuck between a rock and a hard place. The old sales tax was a pig's breakfast, and although you could justify the price of jewellry and expensive perfume coming down on the grounds they were illogically and irrationally taxed in the first place*, no-one in the wowser lobby was going to accept the price of Evil Alcohol in wine form coming down. So, indeed the Equalisation was about equalising the total tax $ take to the status quo. As a 'sin tax' therefore, it's illogical to tax on a value-basis (vs volumetric for the 'sin'), but since the WFA was largely funded by the big players who stood to lose the most from the volume tax (by virtue of reduced physical sales of cheap wine to due a price hike), so it went. Who pays the piper calls the tune. The wowsers were happy because the "tax on wine" was the same as before, the multinationals were happy because they minimised the retail price increase on their volume lines. The government's happy because their $ take rises with inflationary prices, keeping the tax out of the headlines. The only losers were makers & consumers of higher-priced (usually higher-quality) wines. The good lost out to the bad. As usual.

*Mind you, there wasn't much justification for keeping high punitive car taxes on Ferraris and Bentleys either, but since they were so clearly bought by the very wealthy the Luxury Car tax could be justified for its protectionism of the local industry. Logic is the last thing that's ever part of a tax structure in this country.
cheers,
Graeme

[phillisc]

Yes clearly the taxation system on wine In Australia is working so well... unsolicited emails at the top end of town, "failed export orders" etc etc, because people need to shift volume to cover costs...tax included!
And at the bottom end of town, a mixture of indigenous and white Australians who have unfortunately lost their way and frequent the Adelaide south park lands on the first of many ( who knows) casks at 7:30 this morning and many other mornings for that matter when I ride through each day on the deadly treadly.

Yep the taxation system is working so well...don't get me started on how premium Shiraz 80 Km's up the road can be half the price (or less) 10 000 K's away

Cheers
Craig.

[Matt@5453]

Source WBM:

Assistant Treasurer Kelly O’Dwyer and Senator Anne Ruston released this statement a short time ago:

“Consultation on implementing the tightened eligibility criteria will begin with the wine industry in the coming months. As part of the consultation, the Government will release an implementation paper and meetings will be held with stakeholders in major wine producing regions. The Government recognises that there are a range of wine production models in the industry, including grapegrowers, who have a real investment in the industry, but may not own equipment for crushing and fermentation.”

[Sean]

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[Polymer]

They're addressing the wrong issue. They're addressing the 'bad' part of WET without recognizing it is all bad.

Yes people take advantage of the rebate portion, because in reality, it shouldn't be there. They're busying trying to figure out who to take the rebate from and what amounts to limit it to that they haven't realized all you're doing is directly killing off certain places you've made dependent on the rebate and for the big players, it is an absolute NOTHING.

Volume WET w/o rebate addresses several different things...It taxes alcohol..which is what you want to do.
It will lower the average price of wine significantly which means smaller wineries will be able to up their margins and still sell them cheaper than they do today...and if you still can't compete, maybe they shouldn't be. It isn't an inherent right for Australians to create a successful winery. If you make junk wine at a high price, you deserve to go out of business. You want to stay in business, figure out your business so it allows you to stay in business.
"Businesses" can't cheat the system. Why try to tweak every single rule to make sure all of the "right" businesses get their training wheels? No rebate = nothing to figure out, nothing to make a mistake on, nobody taking advantage of the system.
If you do it right, Volume WET = MORE MONEY for the government. This, of course, assumes the volume of wine Australians consume doesn't actually drop....But given that Volume WET doesn't increase the price that much for cheap wine it shouldn't. Yes, for box wine, the % increase is significant..but the $ increase is not.

[odyssey]

But good luck getting a Party leader willing to explain why cask wine cost will double while expensive wine costs will supposedly plummet (not that they actually would), to the crowd at a pre-election debate at the Rooty Hill RSL.

You can be sure the media would spin it as taking from the poor and giving to the rich...

[Polymer]

Yeah I'm sure..but in other countries it is done that way. A lot of people can accept that you're taxing alcohol..just as they tax tobacco..

Might be a tough sell to some but it would be the right way to do it...

[rooman]

But good luck getting a Party leader willing to explain why cask wine cost will double while expensive wine costs will supposedly plummet (not that they actually would), to the crowd at a pre-election debate at the Rooty Hill RSL.

You can be sure the media would spin it as taking from the poor and giving to the rich...

Sadly this comment sums up everything that is wrong with Australian politics. Our politicians always play to the lowest common denominator - namely the uninformed, under-educated working class hero in the Rooty Hill RSL.