Wine tax change to cost industry jobs

WA’s wine industry is facing a period of “extreme rationalisation” and significant job losses as a result of Federal Government tax changes.

Independent analysis by RSM Australia found the wine equalisation tax (WET) changes would result in “a perfect storm of unintended consequences” for WA and warned the rationalisation would be generational.

RSM surveyed almost 200 of the estimated 350 wine businesses in WA. The respondents represent 85 per cent of the State’s production and employ more than 2150 full-time staff.

More than 50 per cent said they would have to cut jobs unless the Government re-considered the tax shake-up announced in this year’s Budget.

RSM found the plan to cut the $500,000 WET rebate cap to $290,000 would strip $8 million a year from WA’s regional wine communities, with the Margaret River region the hardest hit. The communities will lose an extra $9.9 million under eligibility changes. The Government has promised to review those changes but not the cap reduction.

The RSM analysis did not include the financial impact of stripping the tax rebate from bulk and unbranded wine, a move supported by the vast majority of those in the wider industry.

Wines of WA chairman Redmond Sweeny said the State had been disproportionally affected by the tax changes because much of the local industry was focused on premium production.

He said about 30 per cent of claims that reached the $500,000 rebate cap came from WA.

Almost 40 per cent of WA wine businesses are affected by the cap reduction when very small producers claiming less than $50,000 are excluded.

“Those who are hit are our engine room, the biggest employers in our industry,” Mr Sweeny said. “They are the producers with the capacity to deliver regional growth and jobs.”

Mr Sweeny said the local industry, worth about $700 million a year to the WA economy, faced a major upheaval which could have a lasting impact on investment in the sector.

“We are going to see a contraction, a serious rationalisation,” he said. “If we do want to grow our export markets, how do we do it if the grape supply is decimated?”