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Monday, 20 June 1994
Page: 1740

Senator LEES (Deputy Leader of the Australian Democrats) (5.13 p.m.) —On behalf of the Australian Democrats, I support the Sales Tax (Low-alcohol Wine) Amendment Bill 1994 with some enthusiasm. We identified this problem at the time of the budget last year. During the wine tax debate we raised this on a number of occasions with the then Treasurer. It has taken this long to get this remedy before us!

  This measure has been warmly received by Australia's manufacturers of low alcohol wine, ciders and similar products. In particular, the management and staff of the Chateau Yaldara winery in South Australia are very relieved, as the company was severely disadvantaged by the sales tax situation that arose as a result of the budget decisions last year. Chateau Yaldara is one of Australia's largest producers of low alcohol beverages, including well-known products such as Grapella, Spumante and Lambrusco. Because many of Chateau Yaldara's low alcohol products are alcohol removed, they have been treated as wine for sales tax purposes. The wine tax changes that resulted from last year's budget had already seen sales tax on Chateau Yaldara's products jump to 12 per cent, with that rate scheduled to increase to 14 per cent on 1 July next year and 16 per cent in 1996.

  The company's competitors had only suffered a one per cent sales tax increase on their products, including beverages such as sparkling grape juice, clearly placing Chateau Yaldara at a major disadvantage. In fact, it has reported the loss of some of its market share because of this tax anomaly. Today's legislation rights that wrong. It returns low alcohol wine to the concessional tax rate of 11 per cent and removes the future increases that were to go up as far as 16 per cent by 1996. The bill means that competition for sales of low alcohol wine and cider in Australia returns to an equal footing.