Wineries and grape growers are pleading for a temporary break from paying the wine equalisation tax (WET) to ensure they will have enough money in the bank to pay wages and suppliers.
After many have endured drought, bushfire damage to their crops and now a sales collapse because of the economic fallout from coronavirus, national producer body Australian Grape and Wine has asked the federal government to give wine businesses a break so they will have "some hope for the future".
The WET is a 29 per cent tax on the wholesale value of wine made locally, or imported, and also applies to cellar door sales or wine tasting sales.
Wine producers are, however, entitled to a rebate of up to $350,000 a year.
In the absence of immediate relief, Australian Grape and Wine feared a large portion of Australia's 2500 wine businesses and 6000 grape growers would exit the sector.
Removing the requirement to pay the WET, even for 12 months, would be a game changer for many businesses
"This would have enormous flow-on effects in rural and regional communities across Australia," said chief executive, Tony Battaglene.
"So far 2020 has seen drought, fire, smoke damage and now COVID-19 place unprecedented pressure on the profitability of grape and wine businesses.
"Any one of these issues has the potential to send a business to the brink, but taken together, the impacts will likely be too much to bear for many businesses, unless there is swift and decisive government intervention".
"Removing the requirement to pay the WET, even for 12 months, would be a game changer for many businesses currently looking at how they can retain their staff, pay suppliers and stay afloat in what is likely to be a very difficult environment."
The industry was also deeply worried increases in the restrictiveness of COVID-19 measures could even "shut down the 2020 vintage", with an end to the grape harvest still a long way off.
On top of this, businesses were staring down the barrel of tourism, winery events and cellar door sales drying up this year.
"We need to act right now to keep these businesses up and running, and giving business owners a tax break is a quick and effective way to do this," Mr Battaglene said.
"We fear Australia's world-renowned and celebrated grape and wine sector will change drastically in the coming three years.
"We need to fight to secure the future of grape and wine businesses right across Australia."
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