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Excise tax 'punishing' wine producers

Updated at 7:03 pm on 26 August 2010

An industry leader says excise tax on wine is punishing producers, rather than affecting the retail price.

New Zealand Winegrowers chairman Stuart Smith says the tax is intended to increase prices to rein in binge-drinking, but the policy is failing.

Mr Smith told the Romeo Bragato wine conference in Blenheim on Thursday that the tax is being absorbed by producers who are unable to pass on the costs.

In the 20 years since the tax has been indexed, the Consumer Price Index has increased by 60%, while wine prices have gone up only 40%.

Mr Smith says producers have to absorb many of the costs, and the tax is the single biggest threat to profitability.

While growers' annual income per hectare in 2010 is estimated at $10,400, the Government is earning $15,700 in excise tax. Mr Smith says that is 50% more than the grower, who is taking all the risks, and believes that is unfair.

He is calling on the Government to review the excise tax regime.

Agriculture Minister David Carter told the conference the Government is looking at the issue, but producers should not get their hopes up.

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