The Ministry of Primary Industries’ proposal to impose higher costs on the wine industry poses a major threat to the sector and in particular its export business, says Wanaka-based Principal Alistair King from Crowe Horwath.
The MPI has said the increased levies are necessary to recover the costs of its regulatory programmes, yet the wine industry already contributes $200 million annually in excise tax.
“They are now seeking an additional $2.9 million from the industry to meet MPI regulatory costs,” said Mr King, who is chair of the Central Otago Pinot Noir Charitable Trust and a respected wine industry expert.
Mr King said the MPI operated a user-pays regime with regard all agricultural and horticultural sectors. But unlike the other primary sectors, the wine industry uniquely also paid a product-specific excise tax, which had increased massively for the wine industry, he said.
MPI was not asking whether it was fair for the industry to pay both the increased excise tax and nearly $3 million in user-pays tax.
“Margins for the industry are very tight and further costs will reduce profitability further. The industry needs the government to support growth,” said Mr King.
“Under its Business Growth Agenda, the government says it is committed to encouraging economic growth in the regions. Penalising winemakers with an additional cost burden flies in the face of that policy.”
Submissions to the proposal closed late last month.