UK booze tax bid ‘to cork wine sale bonus’

Australia will raise concerns with the UK over its push for an alcohol excise duty on our wine.

Under the proposed changes, alcohol excise in Britain would change from a flat rate of about £2.23 ($4) a bottle to a strength-based system, forcing products with a higher alcohol percentage to pay more.

Trade Minister Don Farrell will raise concerns with the British government over its push to implement an alcohol excise duty on Australian wine, amid warnings the tax would significantly undermine benefits of the free-trade agreement between the nations.

Australia’s largest wine exporter to Britain says the benefits of the deal “will be lost” if London pushes ahead with a proposal to implement an alcohol excise duty of up to 70 pence a bottle.

Accolade Wines chief executive Robert Foye said benefits of the free-trade deal – including a cut in all import tariffs on Australian wine exported to Britain to zero – may be “entirely cancelled out”.

Under the proposed changes, alcohol excise in Britain would change from a flat rate of about £2.23 ($4) a bottle to a strength-based system, forcing products with a higher alcohol percentage to pay more.

Trade Minister Don Farrell. Picture: Tom Huntley

Mr Foye said Britain’s proposed excise duty on wine would unfairly penalise naturally stronger wine typically produced by Australian winemakers, and leave Australian and new world wine makers at a disadvantage.

“While we are hopeful the benefits of this FTA between two historic trading partners can be fully realised, we are mindful that the good work done today will be undone if the proposed alcohol duty reforms are introduced by the UK government,” he said.

“The reality is that the benefit of removing tariffs on wine under the new FTA of up to 20 pence a bottle of Australian wine could be entirely cancelled if a new alcohol excise duty of up to 70 pence a bottle is imposed by the UK next year.”

Ahead of a meeting with Britain’s Secretary of State for International Trade, Kemi Badenoch, Senator Farrell said: “I have consistently raised concerns expressed by the Australian wine industry with my UK counterpart, and will continue to do so, including when I visit the UK shortly.”

The Australian understands Senator Farrell will reinforce Australia’s readiness to advance the new UK agreement into force after the legislation passed through parliament this month.

The government is seeking to implement the free-trade deal before the end of the year to ensure Australian exporters benefit from two tariff cuts in quick succession, with the first round of cuts to occur on the deal’s first day in force followed by a second cut on January 1.

Under the agreement, more than 99 per cent of Australian goods would enter Britain duty free and provide enhanced opportunities for Australians to live and work in Britain.

All import tariffs on Australian wine will be slashed to zero, removing about $43m in tax a year.

Australian Grape and Wine chief executive Lee McLean said the group has been working with government to ensure Australian exporters were not left worse off.

“Australian Grape and Wine is pleased to see the parliament pass the Australia-UK FTA. It provides significant benefit including the elimination of tariffs upon entry into force, saving approximately $43m per annum and levelling the playing field with European competitors,” he said.

“The alcohol duties issue is a separate issue to the FTA and a matter for the UK government. We are proposing alternatives to make the duties system work better for Australian exporters”.

Amid negotiations with the EU on a free-trade agreement, Anthony Albanese on Monday defended Australian wine producers’ use of the label prosecco amid an EU push to ban it.