The Henry Tax Review - Our Thoughts  

Recently, the Henry Tax Review recommended to the government that the tax on alcohol become a more standardised tax based on VOLUME as opposed to VALUE. Today, the government taxes all wine at 29% of it's wholesale value, and then whack GST on top of that total value. This partially explains why NZ wine is generally more expensive in Australia than back in Godzone (other reasons include shipping, higher warehousing/logistics costs in Australia, etc).

The government has declined to take this step, citing concerns over the Australian wine industry - a move we are disappointed with. Why? Well there's two main reasons:

1) The tax on alcohol is based on the societal cost of drinking. So - the more your drink, the more damage is incurred on society (in theory). If I down a 4-litre cask or Chardonnay, there are more costs on society than if I drink a single bottle of $40 Pinot Noir. So taxing based on the volume consumed more accurately reflects the costs that are trying to be recovered.

2) We sell mostly premium wine, and from a purely selfish point of view would like to see the cost of these wines reduced in the Australian Market, particularly when compared with the NZ market. If we take the NZ element out of the debate - a bottle of Grange would cost $133 less under Ken Henry's proposal. That alone sounds preposterous - that one of Australia's most iconic wines is so unfairly taxed...And let's not get in to the "well those people can afford it" debate - that's an issue for income tax, not goods taxes.

The argument from the Australian Wine Industry was that this flat volumetric tax would increase hardship in an already struggling industry coping with serious structural issues and massive over-supply i.e. sales of the cheaper, volume wines like cask wine would be hit hard and supply v demand issues would worsen. This is a fair argument, but we would argue that these structural issues need to be dealt with rapidly by the wine industry in Australia, and an unfair biased tax is not the best way to cope with the problem. The fact is that a fairer tax would stimulate sales in the premium end of Australian wines - something we would have thought should be encouraged? If this tax issue is not to be settled now for fears of impacting the wine industry, then when?

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More Power Scotty (Scottie?)!!

We're implementing some pretty cool enhancements to the site over the next couple of weeks. More details to follow in our next newsletter, but in the meantime look out for the ability to add your own reviews to the wines on our site, as well as more detailed product info. We've also put a rocket up the server to add even more power - so hope you are enjoying a speedier joyride around the site!

Upcoming Events

There are some great NZ Wine Events coming up in May, June & July. Over the next week we'll be posting details on a Central Otago Wine Tasting, Hawkes Bay Wine Tasting and a NZ Boutique Winemakers' Showcase...We'll keep you up to date as soon as we have finalised details to hand.

With Best Regards,

The NZWINEONLINE Team

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