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Hot Topic NBR Focus: GMO
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Wine industry says it will absorb excise lift

Wine industry lobbyists say people seeking a big boost in excise duty to help regulate alcohol consumption may hurt the wider economy."Those who want higher rates of excise as part of the Sale of Liquor reform will only succeed in putting wineries ou

NZPA
Sat, 03 Jul 2010

Wine industry lobbyists say people seeking a big boost in excise duty to help regulate alcohol consumption may hurt the wider economy.

"Those who want higher rates of excise as part of the Sale of Liquor reform will only succeed in putting wineries out of business," Winegrowers' chief executive Philip Gregan said.

"That would be bad news for tourism, bad news for the hospitality sector and bad news for the economy."

A range of interests have so far unsuccessfully called on the government to raise the excise tax on alcohol.

In April the Law Commission said the government should raise the excise tax on alcohol by 50% but Justice Minister Simon Power said within an hour that such an increase was unlikely to go ahead.

The government plans to announce legislative changes to alcohol laws before the end of 2011.

Despite the reluctance to raise excise tax as part of its alcohol reform agenda, the government annually adjusts the excise taxes on alcohol in everything from ice cream to wine, cider, spirits and liqueurs.

Winemakers say that even though the government boosted the excise on wine by 4c a bottle on July 1, consumers are unlikely to see any lift in wine prices.

New Zealand Winegrowers said today that 84% of the wineries who responded in a recent survey on whether they intended to pass the tax increase onto consumers indicated that they would be forced to absorb the excise increase.

"Many wineries are already suffering financially and this latest tax increase will make the times that much tougher for them," Mr Gregan said.

"The simple fact is the market will not accept price increases and wineries have no option but to absorb the tax rise."

More than 170 wineries responded to the survey, and 80% indicated they had not increased prices in the past three years.

"In fact, 48% of wineries said they had not increased prices for at least five years or had never lifted prices, despite excise rising 11.6% since June 2006," the industry body said.

About 32% of wineries indicated they had in fact lowered prices in recent years despite annual excise increases.

Mr Gregan said the survey highlighted the "serious financial pain" the government's annual excise increases were causing small and medium wineries.

Excise duty was a production tax, and not a consumption tax -- wineries were charged for the wine they made, not the wine they sold.

NZPA
Sat, 03 Jul 2010
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Wine industry says it will absorb excise lift
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