Look out!

Regressive tax on the way!

A regressive tax is generally a tax that is applied uniformly. This means that it hits lower-income individuals hardest. In recent years Riverland Wine has often warned of the likelihood of a tax policy review that will increase the tax on wine and make life more difficult for the majority. Bear in mind, the Australian Wine Industry is already taxed at a higher rate than all its competitors. If you are still unsure of what a difference it will make, here are a few facts. The following examples assume the most likely “rate” used to impose the tax will be $47.09 per litre of alcohol and a (conservative) retailer margin of 29%:

  • A typical 4 litre cask will increase in cost by 182% from $18.99 to $42.33
  • A typical 2 litre cask will increase in cost by 60% from $14.99 to $24.05
  • A low cost bottle of wine will increase by 70% from $5.99 to $10.19
  • A bottle of Jacob’s Creek will increase by 33% from $9.99 to $13.22

At $20 per bottle there is no impact on price, while a $30 bottle will be $2 cheaper and a $200 bottle will be $52 cheaper; that’s IF the retailer passes on that benefit to the consumer.

It’s not difficult to work out who will be most adversely affected, besides wineries and growers; those on lower income who enjoy a wine or two most evenings as one of life’s little indulgences. Senior citizens and pensioners who have underpinned the industry for decades will suddenly have to adapt to one less indulgence while those with more “discretionary” spending power will have more to spend on other treats!

What IS difficult to work out is why two of the companies, Treasury Wine Estates and Pernod Ricard (Orlando), who have been working with us for many, many years have decided to lobby in favour of the above regressive tax. If you wish to make a comment on this volumetric tax issue, please email or phone Chris or Andrew on 8584 6399 or 8584 7897.

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