New Report Bats for Federal Wine Tax Reforms

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By Erik Pineda | October 30, 2012 5:30 PM EST

A new study is advocating a switch from wholesale tax levied on wine, likely increasing the cost of alcohol-based drinks for the average Australian but reducing at the same time problems directly attributed to the product.

Implementing excise tax per specific volume of wine retail and consumption would lead to some $230 million additional revenues for the federal government, according to Michael Thorn, CEO of the Foundation for Alcohol Research and Education (FARE).

The report commissioned by the group has indicated that wine consumers would feel the pinch of the propose tax reform, especially patrons of affordable wines, the end-benefits far outweigh the concerns that were expected to be raised too by the liquor sector.

"Alcohol taxation reform would improve the efficiency of the Australian taxation system and improve resource allocation efficiency by removing current distortions in favour of cheap wine," the FARE study was quoted by the Australian Associated Press (AAP) as saying on its report.

Unchecked alcohol consumption, Mr Thorn added, actually redound to financial burdens that each year siphon out an estimated $15 billion from the federal coffers, which mostly were used to cover for health care expenses.

The wine tax reform would indeed hurt some sectors, but in the end more Australians and the economy will collect the end gains, the report said.

"Even when we look at half the picture and take a conservative approach which looks solely at the harm to others, this analysis demonstrates unequivocally that alcohol tax reform would reduce that price," Mr Thorn was reported by Business Spectator as saying.

He added that the recommendations outlined on the FARE report are fully reconciled with the Henry Tax Review earlier commissioned by the Labor-led government.

FARE, however, is also aware that Treasurer Wayne Swan deems the proposal as likely detrimental to the general interest of the wine industry.

Notwithstanding, Mr Thorn is hopeful that Canberra would have a change of heart and throw its support behind the reform initiative, which in essence would lead to the scrapping of the wine equalisation tax scheme.

The Gillard Government, FARE said, "can and should reconsider its position on reform because more people will be harmed if not . . . delaying reform to the alcohol taxation system in Australia is both irresponsible and reckless."

Further, allowing the proposed reforms to be delayed would suggest that the government is afflicted with "a deficit of political leadership," Mr Thorn said.

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