Wine Spectator: Chilean Winemakers Decry Proposed Tax HikeJuly 9, 2014
Chilean winemakers and grapegrowers are deeply alarmed about a proposed tax hike they believe could put some of them out of business, Wine Spectator reports.
Today, wine in Chile is taxed at 15% per liter wholesale. That’s high compared to other nations in the Organization for Economic Cooperation and Development, which includes the much-wealthier major wine countries of Europe and the Americas. If the new tax, part of a much larger tax reform proposed by Chile’s new government, is passed, as of September the new rate for all alcoholic beverages would be 18% plus 0.5% per degree of alcohol, which represents 60% more for a wine of 12% abv than the present tax. Considering that in Chile the average bottle retails at $2.80 after the current tax, the cost increase could be substantial.
Proponents of the beverage tax hikes say the goal is to raise revenue for educational initiatives while discouraging excessive consumption. Chileans do out-drink their South American counterparts per capita in alcohol, but their wine consumption is lower than other alcoholic beverages and well within the range of what the World Health Organization considers safe. Because of the alcohol percentage surcharge and the fact taxes are already high on liquor, “wine suffers the biggest percentage increase of all beverages [60%],” reads a statement issued by Wines of Chile.
Winemakers fear the tax would translate into more beer sales and less wine sales. Beer and spirits have already chipped away at wine consumption: Four decades ago, 86% of alcohol consumed in Chile was wine; now it’s 34%.
Chile’s small growers face the greatest threat. “(The tax is) devastating for small producers that sell their grapes or wines for local consumption,” says Aurelio Montes of Viña Montes and vice president of trade group Wines of Chile. While the tax would hit exported wines less directly, wineries fear that without a strong domestic market to bolster sales at the lower end, the industry will be weakened and all will suffer. Members of the industry have met with government representatives and hope they can stop the measure.Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.