Consumer and import taxes in the world wine market: Australia in international perspective

Abstract

Virtually all countries tax the consumption of wine (and other alcoholic beverages). However, the rates of taxation, and the tax instruments used, vary enormously between countries. This paper details for all the OECD members plus some other countries the consumer tax equivalents (CTEs) of wine taxes as of 1996. It shows wholesale sales taxes, excise taxes, import tariffs, and value-added or goods-and-services taxes, expressed both in dollars per litre and as a percentage of what the retail price would be without those taxes. These are shown in aggregate and also separately for non-premium and premium wines (since many wine taxes are volumetric and so their percentage CTE rates vary with the price of wine). The CTE tends to be lower the larger a country's per capita production of wine. Australia and New Zealand are shown to have relatively very high wine CTEs. In Australia's case this is especially so for premium wine, because Australia uses a percentage tax rather than the commonly used volumetric tax measure. Moreover, the extent to which Australia is an outlier has increased considerably during the past 15 years. This has implications for the current debate over reforms to Australia's tax system. The paper concludes by pointing also to the high wine import tariffs in some countries, arguing that there is scope for trade negotiators to expand wine market access in East Asia especially as the next WTO trade negotiations begin at the end of 1999.