THE federal government has announced fresh changes to the Wine Equalisation Tax (WET) to reduce ongoing rorting of the system causing market distortions.
It comes after national industry consultation led to the government altering the new measures announced in this year’s federal budget.
At the May budget, it was revealed the WET rebate cap would be reduced from $500,000 to $350,000 on July 1 next year and to $290,000 the following year, with tightened eligibility criteria in July 2019.
The changes announced today by Assistant Agriculture and Water Resources Minister Anne Ruston and Revenue and Financial Services Minister Kelly O’Dwyer will see the rebate cap reduced from $500,000 to $350,000 from July 1, 2018.
Ms O’Dwyer and Senator Ruston said following a national consultation program with the wine industry, as announced in the 2016 budget, key changes to the government’s eligibility criteria would protect the WET rebate scheme’s integrity.
Eligible producers must own 85 per cent of the grapes at the crusher used to make the wine and maintain ownership throughout the wine making process;
The rebate is limited to branded packaged wine, in a container not exceeding 5 litres and branded with a registered trademark for domestic retail sale; and
The rebate claims must be better linked to the WET being paid.
The new eligibility criteria will apply from July 1, 2018.
Also announced by the government, to encourage more wine tourism, up to a further $100,000 per annum will be made available to producers who exceed the rebate cap through a new Wine Tourism and Cellar Door grant.
“Again the Government wants to back producers who add value and vibrancy to regional communities by encouraging visitors to wine regions - the eligibility criteria to qualify for the new grant will be finalised following consultation with the industry, a statement said.
Ms O’Dwyer said it was a good news story for wine producers and wine regions.
“We have listened carefully to industry and tailored the package so wine producers who build brands, invest in regional communities and create local jobs are the beneficiaries of the rebate and not the traders and major retailers,” she said.
Senator Ruston said the Australian wine industry was a major employer, manufacturer and driver of tourism in regional communities.
“These reforms along with our budget commitment of $50 million to promote Australian wine internationally and domestically will be a springboard for growth,” she said.
The government said the final WET rebate reforms would be introduced into parliament next year.
SA rural Liberal MP Tony Pasin who has also championed reforms to the rebate system said he welcomed the changes.
“Representing such a large and varied portion of the wine industry in my electorate, I have been fighting for fair and balanced changes to the WET rebate system since being elected to Parliament in 2013,” he said.
“It has been a long journey due to the complexity of the issue but I’m so pleased that we finally have an outcome on this.
“I congratulate the wine industry for coming together to identify the need for reform and propose a pathway in a unified fashion.”
Mr Pasin thanked Senator Ruson and Ms O’Dwyer and Liberal MP Josh Frydenberg who released the first discussion paper in 2015 as then Assistant Treasurer.
Leading Australian winemakers, Treasury Wine Estates (TWE) and Pernod Ricard Winemakers (PRW) welcomed the announcement saying it was a step forward in delivering much needed reform; returning integrity to the WET rebate and ensuring it is focused on supporting genuine Australian winemakers.
Treasury Wine Estates managing director Angus McPherson said in recent years, the WET rebate had been increasingly rorted and used in a way that had contributed to the industry’s structural oversupply.
He said it had also negatively affected the profitability of many legitimate winemakers and grape growers.
"We welcome the government’s decision to tighten eligibility for the rebate – to remove bulk and unbranded wine from July 1, 2018, and to target winemakers who have invested in the industry from the crush all the way through to the branded product,” said.
Helen Strachan of Pernod Ricard Winemakers said there reforms were a necessary first step that would go a long way toward addressing the distortionary impacts of the current rebate.
“We support a continuing focus on growing export demand for premium Australian wine, and are pleased that the Government has maintained its additional funding to Wine Australia,” she said.
Both companies said they were pleased the government had announced a decision ahead of next year’s vintage and urged parliament to consider and support the changes as soon as possible in 2017.