Action pledged on 'unfair' tax break

New Zealand's wine industry will not tolerate Australia flouting trade rules by giving its winegrowers a tax rebate, Trade Negotiations Minister Jim Sutton says.

"It tilts the playing field in favour of Australian producers to the detriment of New Zealand producers," he said in Blenheim yesterday.

"Clearly we cannot accept this. It is extremely disappointing to be treated so badly by our partners in the world's oldest and most comprehensive trade agreement, the people with whom we are supposed to be building a single economic market."

The minister told delegates at a wine conference that Australia was in breach of its CER trade deal with New Zealand and its WTO obligations in offering its wine producers a hefty tax rebate.

This year the Australian Budget allowed wine producers to claim a rebate on the 29 per cent Wine Equalisation Tax on up to $1 million of wholesale sales a year.

The rebate covers all domestic wine producers and wholesale sales, with 90 per cent of producers being refunded their entire excise tax.

Marlborough Winegrowers spokesman Stuart Smith said the rebate would "hurt New Zealand wine companies badly in the Australian market".

Mr Sutton said New Zealand had tried to work through the issue with Australia using the CER system and had initiated formal consultations for the first time in the trade agreement's 20-year history.

But little progress had been made so far.

- NZPA