Australian Grape & Wine is calling on the Australian Government to give Australian wine businesses a temporary break from paying the Wine Equalisation Tax (WET).
The move would ensure there’s enough money in the bank for winemakers to pay wages and suppliers and give them some hope for the future.
The WET is a 29% tax on the wholesale value of wine made locally, or imported, and also applies to cellar door sales or wine tasting sales.
“2020 has seen drought, fire, smoke and now COVID-19 place unprecedented pressure on the profitability of Australian grape and wine businesses” said Tony Battaglene, Chief Executive of Australian Grape & Wine.
“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 a what is likely to be a very difficult environment” said Mr Battaglene.
In the absence of immediate relief, Australian Grape & Wine fears a large portion of Australia’s 2500 wine businesses and 6000 grape growers will exit the sector. This would have enormous flow-on effects in rural and regional communities across Australia.
“As I said yesterday, we’re deeply worried that an increase in the restrictiveness of COVID-19 measures could shut down the 2020 vintage” said Mr Battaglene. “And on top of this, businesses are staring down the barrel of tourism, winery events and cellar door sales drying up completely.”
“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”.
“If we do not act now, 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."
Winemaking has been officially classed as an essential service during the COVID-19 pandemic.
The Federal Minister for Agriculture, David Littleproud, confirmed last week that winery operations, along with all agricultural industries, will continue regardless of what lock down restrictions are enacted in Australia.
Earlier this month, the UK’s Chancellor of the Exchequer froze alcohol duties for spirit, wine and beer.
Chancellor Rishi Sunak cut a planned increase in duty across spirits, wine and beer. It's only the second time such a measure has been taken in the past 20 years.
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