The Australian wine tax regime: Assessing industry claims

• David Richardson, Richard Denniss
• The Australian Institute

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30 September 2011Cask wine produced from grapes grown along the Murray River is being sold for less than the cost of bottled water, this report reveals. With up to 960 litres of water used to make a single litre of cask wine, and bottled water retailing for up to $3.00 for 500ml, the Institute is concerned that consumers can pay more for water than for wine.

There has been much debate recently about the way that wine sold in Australia should be taxed. The proposal by the Henry Tax Review to move from the current ad valorem tax to a volumetric tax, bringing wine in line with other types of alcoholic drinks, has been fiercely challenged by some in the wine industry. To back up its opposition to the change, the Wine Federation of Australia (WFA) has produced estimates of the supposed job losses and financial impacts on low-income households that would result. This paper examines the veracity of these claims and the assumptions on which they are based.