Sharp reaction to wine tax increase

Press, Volume CXII, Issue 33061, 31 October 1972, Page 2

Sharp reaction to wine tax increase

Christchurch wine merchants report that their customers have reacted sharply and vocally to the recent substantial increase in the tax on imported wines.

The effects of the increase, which ranges from 29c to 36c a bottle at points of wholesale sale, are being fully felt now that virtually all stock has been marked up. The tax has been imposed by the Government at the behest of New Zealand wine producers, who over-pro-duced by two million gallons this year. The tax rise,- which will bring the Government about $3.50 extra revenue on every dozen bottles of imported wine sold, applies to all imported lines except spirits, full-strength liqueurs, and French champagne. Most effect It hits hardest at the cheaper wines, especially those from Australia. A one-gallon pack of Australian wine which formerly cost $7.10 has risen to $9.20 —nearly one-third. Aperitifs and vermouths, as well as sherries and ports, bear the increase. Hotel bottle-stores have also been receiving complaints from their customers. Restaurant customers will find that the tax increase

adds about 70c to the cost of a bottle of imported wine bought when dining out. “Political move” A leading Christchurch restaurateur, Mr F. J. H. Visser, yesterday said the tax increase was nothing but a political move. It would not effectively protect New Zealand wines, he said: a bottle of imported sparkling wine could in no way be compared with a New Zealand sparkling, most of which was “sophisticated sparkling lemonade.” Customers would not switch to local wines because of the tax; they would just pay more to the Government. “But I guarantee that within a few months New Zealand wine producers will increase their prices to close the gap, then it will be time for another round of increases on imported wines. Rise noted “As it happens, I have just been notified that all Gorbans’ sparkling New Zealand wines will be increased in wholesale price 10c a bottle from November 1,” Mr Visser said. “So the inflationary spiral has already started.” After the latest tax increase, wine in New Zealand was more expensive than almost anywhere else in the world, said Mr Visser. Wine merchants also say they do not expect the tax to protect New Zealand wines, and that they expect New Zealand producers will increase their own prices soon. Even if those who bought imported wines now halved such purchases, and drank New Zealand wine instead, >t would use up only one tenth of this year’s over-produc-tion of two million gallons—and within two years overproduction was expected to increase to seven million gallons, the merchants said. Customers were bitter about the rises, which had increased bulk wine prices almost a third, made some bottles of Australian wine cost more than $3, and increased Spanish and Chilean wine prices to more than $2. Lauded for 65c Many Spanish and Chilean wines are landed in New Zealand for little more than 65c a bottle. They previously sold about $1.60 upwards—the high relative price being partly to forestall protests from New Zealand producers. Wine merchants also say that Australian wines are hardest hit, and that Australian producers, considering the N.A.F.T.A. free-trade agreement, are unlikely to be happy about the situation. Nearly all the surplus wine that New Zealand producers are anxious to quit is of poor quality, the merchants say, and is unacceptable to those who normally buy imported lines. Some scarce Good New Zealand wines are still scarce. As to cheaper imported wines, the total imports from Spain, Portugal and Chile last year were 36,000 gallons, while 70 times that much wine was made by the local industry. Australian wines are also of far better quality than the New Zealand over-produced

lines. No water and sugar are added to them, as is done in New Zealand, and only one-third as much wine is made from an acre of grapes as is the case in New Zealand.

One wine expert has said that wine drinkers in New Zealand “as opposed to ‘plonk’ drinkers” would be better off if no wine were made in this country, but requirements supplied by Australia under the free-trade agreement. The Government has said that the new impost on imported wines will be reviewed after one year, but Christchurch wine merchants are not hopeful of its being lifted. Once applied, taxes are rarely removed, they say, and increases in local wine prices will also militate against the removal of the tax. “Incentive gone” By introducing such a protective tariff, the Government had put back the clodk and removed the incentive to produce a quality product in New Zealand, said the president of the Christchurch Wine and Food Society (Dr M. F. Fahey). “For too long we have seen gallons of mediocre wine produced in New Zealand. At last the industry is showing signs of meeting the overseas challenge by producing quality wines from classical grapes. “The new tariff will not encourage this. With increased shipping and production costs as well, most people will be unable to buy imported wines, and they will become a luxury for very few. “The only way people can learn about wines is to compare imported wines with New Zealand wines. We must encourage New Zealand producers to produce good quality rather than copious quantity,” Dr Fahey said. Mark-up attacked Dr Fahey also said that in many good restaurants throughout New Zealand wine costs were already beyond the pockets of many, not only because of the cost of the wine, but also because of the “quite ridiculous” mark-up imposed by some restaurants—in some cases more than 150 per cent.