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Thursday, 22 October 1931


Mr PATERSON (Gippsland) .- This is a machinery bill, and has apparently been introduced with the object of changing the method of imposing taxation on wine. I understand that, so far as a large part of the wine industry is concerned, there is no great objection to this, although there may be objection from other quarters. At the present time, taxation is imposed only on the fortifying spirit contained in the wine. There is no excise tax on wine as wine. Under the proposed method it is intended to impose the excise tax on the wine itself as wine, at so much a gallon. There is something in the nature of a "pig in a poke" about this legislation. There is no indication as to the extent of the future taxation, and we shall not know what it is to be until an excise bill is brought down to impose it. The bill merely indicates that it will be applied in a way different from that which obtained in the past. It appears inevitable that, when this bill becomes law, taxation will be imposed on wine regardless of whether it is sweet or dry, although the same rate will not necessarily apply to each.

At present only sweet wine is taxed. It may be that some honorable members are curious to know why that is so, and what is the real distinction between dry and *weet wine for taxation purposes. I admit that probably no one in the House knows less than I about wine as a potable liquid, but I know a little more about the method of taxation of the different types of wine. When the grapes come in from the vineyard and are placed in vats at the winery, fermentation immediately begins. If that fermentation process is permitted to continue without interruption, the whole of the sugar content of the grapes is converted into alcohol, which results in a dry wine, containing between 20 and 2S per cent, alcohol. That dry wine is not taxed, as at present excise tax is levied only on fortifying spirit, none of which is introduced into dry wine. If the grapes are put into the vats at the winery and the process of fermentation is arrested at a certain point by the introduction of a quantity of fortifying spirit, the result is a sweetwine. The wine retains some of its original sweetness, because a portion of the grape sugar remains unconverted into alcohol. Sweet wine usually contains from 34 to 40 per cent, of alcohol.

If the change contemplated by this bill is brought about, and excise tax is imposed on wine as wine, without taking into consideration the fortifying spirit that may be used in it, it appears to me that the taxation must apply to all wine at so much per gallon. If, despite thi* legislation, it is the intention of the Government to confine taxation to sweet wines, wine-makers will take advantage of the opportunity, and mix the two classes, using a quantity of sweet "wine containing as high a percentage as possible of grape sugar and spirit. The practice would deprive the Customs Department of a considerable amount of revenue.


Mr Crouch - Is it not done at present ?


Mr PATERSON - There is not th*┬╗ same incentive to do it at present. Supposing that a wine-maker takes a wine, showing a very high sugar content, and a 40 per cent, alcoholic content, and mixes it with an equal quantity of dry win*1 with an alcoholic content of 28 per cent., on which there is no taxation, the result would be a blended sweet wine with an alcohol content of say, 34 per cent. Thai would considerably reduce the duty chargeable. For that reason, it seems to me that, if this system is followed of imposing taxation on wine as such, at so much per gallon rather than on the spirit, and dry wine remains tax free the Customs Department must inevitably lose a certain amount of revenue.


Mr Jones - Is the honorable member serious when he states that there is no incentive at present for makers to mix the two types of wine?


Mr PATERSON - There is not smuch incentive to do so now, because taxation is imposed only on the spirit content of the wine. It may be the practice to mix the two types of wine, but the profit to be gained thereby is nothing compared with what it would be if taxation were applied to sweet wines at so much per gallon, and dry wines left free of tax. There are relatively few persons making fortifying spirit. It is produced by tb┬╗distilleries. On the other hand, there are a great many who make wine. I understand that very excellent wine is made by persons who own only a modes', plant and operate on a small scale. If the taxation is going to apply to all wine as such, rather than to the fortifying spirit content, the measure will need additional policing. I take it that that is the reason why the Government proposes that the producer must be registered, and the wine-maker licensed. The registration of the grape-grower is to be free, but there is to be a nominal charge to license a wine-maker who has a small output, and a greater one for the man who is operating on a bigger scale. [Quorum formed.] At present an excise tax must be paid on sweet wine that is to be exported. When the export occurs, a drawback of that tax is obtained, and a bounty is paid on the wine exported. There are really three operations. Under the proposed scheme no tax will be paid on the wine exported, so that there will bc no drawback. In that way the new system will effect a simplification. Clause 24 reads -

Licences may be cancelled by the Minister hy notice in the Gazette if the licensee is convicted of any offence against this act or any other act relating to excise.

That is a very great power to give to the Minister. I do not suggest that it will be unwisely used. Nevertheless, if some future Minister were to use that power drastically, and cancel the licence of a wine-maker who employed a great number of men, because his manager or> some other employee had committed a technical breach of the law, the result would be very serious, indeed. I imagine that there must be a certain amount of apprehension among wine-makers as to what might result from the bestowing of primitive power upon the. Minister. Some of that apprehension might be removed if the Minister would assure the House that the powers conferred in this clause to cancel licences will be used with discretion and moderation. Will there be any right of appeal against the delicensing of a wine-maker, or will the Minister's decision be final? I assume that the delicensed person will have recourse at law against the decision of the Minister.


Mr Latham - The clause provides only for cancellation after conviction; there can be no doubt as to the fact of conviction.


Mr PATERSON - The Minister could take away a licence after only one conviction, which may have been for a more or less technical offence. That is a great power to give to the Minister.

Clause 62 provides -

No person shall after any wine has been delivered for home consumption mix that wine with any wine which at the time of its delivery for home consumption was liable to a different rate of excise duty.

I 'could understand this proposal if the Government intended to tax at a flat rate per gallon only the heavier wines and exempt light wines. There would then be an incentive to blending, and it would ba exceedingly difficult to prevent such a practice. But if the Government intends to impose the same taxation on all wines, whether dry or sweet, fortified or unfortified, there is little need for the clause. If taxation were imposed on a scientific basis, rising gradually with the increase in the strength of the wine, little relief from tax would be gained by blending, or if blending took place, little or no loss of revenue would result.







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