The price of spirits and low-alcohol wine could drop if the Government follows the recommendation of the Tax Working Group, which is looking to simplify alcohol levies.
At the moment, alcoholic beverages are taxed per litre and the rate varies on the type of beverage. Beer is taxed at around $29 per litre of alcohol, spirits at $53 per litre of alcohol and non-fortified wine taxed at $2.94 per litre regardless of the alcohol level, provided it is below 14 percent.
The Tax Working Group, led by Michael Cullen, has said that "a case could be made for applying a consistent rate per litre of alcohol across all products" and is recommending a review of the levy system.
Philip Gregan of NZ Winegrowers said that the potential simplifying of the levies “sounded good” but was quick to point of that compliance costs could shoot up if winemakers were taxed depending on alcohol percentage. The reason that wine is taxed by the litre rather than by alcohol content is because of the frequent variations in alcohol percentage, and the cost of compliance could soon become prohibitive if winemakers were required to work out exactly how much alcohol is in each bottle. "We would have grave concerns if in the name of simplification the wine rate was lifted to the spirits rate."
The Brewers Association also welcomed the potential for change, saying that there is a strong case for lowering tax rates on low alcohol beer and craft beer. Australia offers tax breaks to smaller brewers.