Commonwealth’s 2016 Budget Wine Tax Rebate Proposals

Paul Kenny, Maz Demosthenous

Abstract


Australia’s significant wine equalization tax (WET) and the WET rebate policies are out of step with our competitors’ low touch wine taxation regimes, and these policies have been subject to significant criticism. This article critiques the 2016 Budget WET rebate reform proposals which only partially address the multifaceted wine tax issues. Given the different views on Australian wine taxation there is a need to assess the case for the WET rebate having regard to the generally accepted four tax policy criteria. There is no known such analysis of the WET rebate. A partial policy analysis is undertaken to critique the WET rebate proposals. The WET rebate analysis is undertaken from the perspective of four well-accepted tax policy criteria: Fiscal adequacy, economic efficiency, equity, and simplicity. The WET rebate cannot be justified. The budget proposals to reduce the WET rebate and restrict eligibility are a step in the right direction toward a better policy outcome. Reducing the value of the impact of the WET rebate will have a slightly negative economic impact on some wine regions but the proposed assistance will help the industry to adjust. Research into value of the positive impact of the WET rebate on regional Australia is needed to assess: The additional consumer surplus generated by additional wine consumption choices, the value of tourism, and economic impact on regional economies.  

Aus. J. Law, Ethics & Gov. Vol 3(1), April 2017, P 18-26


Keywords


Wine Equalization Tax; Wine Equalization Tax Rebate; Tax Policy; Wine Tax; 2016 Commonwealth Budget

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