Reply To “The Press” On Imports Of Spirits

Press, Volume CIII, Issue 30562, 3 October 1964, Page 23

Reply To “The Press” On Imports Of Spirits

The president of the New Zealand Wholesale Wine and Spirit Merchants* Federation (Mr R. H. T. Hamilton) says he cannot let pass a recent leading article in “The Press” on wines and spirits without pointing out some serious mis-statements and halftruths.

“First, of course, the figures given at our meeting relating to the imports for wines and spirits having fallen considerably as a percentage of total imports were correct, and we only ask that we be allowed to return to approximately the old percentage. As Hie return to the Government in taxation is greater pound for pound of import licence on Spirits than, we think, on any other goods, it is good economics to keep our quota up to its fair percentage,” Mr Hamilton said. "Only Half Correct” "The reduction makes no allowance for the substantial increase in population since 1956, especially in the northern part of the North Island where many brands of whisky are in very short supply. It must be remembered that we are on 75 per cent of C.I.F. licence value compared with 1956; and since then there have been substantial F. 0.8., and freight increases. “Second, your statements regarding duties on gin are only half correct They are correct in the actual rates given but you go on to say this is an anomaly. I cannot agree with this, as the preferential rate was arranged with the Government before the spirit distillery was built and was one of the conditions on which it would be operated. There is nothing unusual in this, as many other countries have preferential excise rates for local production. Australia being a notable example. In any case gin still carries a duty of 135 s a case as compared with 90s pre-58 budget. Many other businesses here have preferential duty rates, the most notable ones being the preference given to locally assembled cars as against fully assembled imports and the woollen piece goods trade. “Third, you are quite wrong in simply multiplying the spirit production by the difference in duty rates and quoting a loss of revenue of

£528,000. For one thing the production of spirit from the spirit distillery is not the production or the sales of gin from the three compounding plants. “A significant amount of spirit production goes into the cocktail type of drink, on which a different rate of duty is levied altogether, as it is only of wine strength when marketed. “It is also a fact that for the last two years production of gins has been at a peak owing to a large number of brands being put back on the market here and therefore the compounders have been rushed to get these out. “It is a fact that the spirit distillery is not now working to nearly its full capacity. Duty on Gin

“It is also, of course, a completely wrong assumption on your part that if gin carried the same duty as other spirits its consumption would be the same. The substantial increase in gin and other white-spirit-derivatives drinking has definitely occurred since the New Zealand product went on the market here, and this is due to its favourable price and particularly to the fact that the quality of the New Zealand product equals any other country’s production and exceeds many. A ss-a-bottle increase would substantially reduce the demand for gin and thus reduce the revenue to the Government

“The swing to gin drinking is well recognised by the wine and spirit merchants and has been a big factor in allowing the present rate of import

licence to see us through without experiencing extremely drastic shortages which would bring back the need for rationing. Underbond gin from the United Kingdom, freight-paid to New Zealand, is still cheaper than the New Zealand production. “The basic cost of production of the spirit distillery is high, and export sales cannot be made, so any interference along the lines your leader suggests could overthrow a very useful New Zealand industry turning out an absolutely first-rate product “The anomaly Mr Muldoon referred to and which you do not specify was the duty on spirit liqueurs, which are taxed as if the whole of the quantity in a case was proof spirit instead of being taxed on the proof quantity as is done with whisky, gin, as is done with whisky, gin, brandy and other ‘straight’ spirits. Most spirit liqueurs are about 70 per cent proof only, whereas standard whisky brandy etc, is about 75 per cent proof. Spirit liqueurs therefore pay 240 s for a two-gallon case as against 180 s for straight spirits. This is then subject to 20 per cent sales tax, so the whole effect is for Spirit Liqueurs to pay 72s more tax a two-gallon case than straight spirits, and yet most have 5 to 10 per cent less proof spirit in them. Surely this is a real anomaly. “On the commencement of distillation in New Zealand the merchants’ import licences were all reduced by the amount of gin, vodka, and Geneva Imports in the previous year.”