Pernod Ricard and Treasury Wine Estates (TWE) have urged Australia’s federal government to "significantly reform" the wine tax system - a move that has reportedly been opposed by Accolade.

In Australia, beer and spirits are taxed according to their alcohol content and container size but wine is taxed on wholesale price. The Wine Equalisation Tax (WET) system also features a rebate of up to AUD500,000 (US$385,500) per financial year for wine producers. It was set up to give smaller producers a boost and also means wine is not subject to excise duty, unlike other alcohol products.

Both Pernod Ricard and TWE have called for wine to be taxed in a similar way to spirits and beer but Accolade has warned this will push up prices.

Pernod Ricard and Treasury have submitted arguments to the Federal Government’s tax reform discussion paper. The key points ask:

  • That significant reform of the current WET rebate occurs
  • That the Wine Equalisation Tax (WET) moves to a category-based volumetric wine tax system.
  • That wine remains outside the excise system, and is taxed at a category-based volumetric rate, distinct to beer and spirits.

Jean-Christophe Coutures, CEO and chairman of Pernod Ricard Winemakers, said: "This is a better, simpler, fairer system of taxing wine which will support a more sustainable future for the Australian wine industry."

Angus McPherson, managing director for ANZ, Treasury Wine Estates added: "Our proposals are a genuine attempt to improve our industry’s future and ensure Australian wine can compete and win both domestically and in key international markets."

But wine rival Accolade is not in favour of switching to volumetric tax, according to a report in the Sydney Morning Herald. Chief executive John Ratcliffe said that it would mean a price increase for four out of five bottles or casks of wine and "hit low-income earners".

In April, the Australian Grape & Wine Authority said exports of Australian wine in the year to the end of March rose by 3.6% in volumes and by 3.9% in value.