Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)General outline and financial impact
Wine Equalisation Tax
The A New Tax System (Wine Equalisation Tax) Bill 1999 (WET Bill) introduces a wine tax on assessable dealings and importations of wine made on or after 1 July 2000. The new wine tax replaces the existing wholesale sales tax (WST) that applies to wine and similar alcoholic beverages, and is introduced to ensure that, following the introduction of the goods and services tax (GST), the price of wine remains stable.
The wine tax applies to wine including fruit and vegetable wine, cider, perry, mead and sake.
A system of quoting is designed to avoid the tax becoming payable until the last wholesale sale.
Date of effect: The WET Bill will apply from the date of Royal Assent (the effect being that wine tax will apply to all assessable dealings in wine made on or after 1 July 2000).
Proposal announced: The Government announced the proposal in Tax Reform: not a new tax, a new tax system: The Howard Governments Plan for a New Tax System on 13 August 1998.
Financial impact: The effect of the wine tax on revenue cannot be separately identified from that of the GST and other tax reform measures. Since the wine tax will replace the existing WST treatment of wine, it is not expected to increase or decrease revenue to any significant extent.
Compliance cost impact: Refer to the Regulation Impact Statement included in this explanatory memorandum.
Application: To coincide with the commencement of the GST and the abolition of the WST from 1 July 2000, the wine equalisation tax will apply to all assessable dealings in wine made on or after 1 July 2000.