Wine export demand shocks and wine tax reform in Australia: Regional consequences using an economy-wide approach
AbstractWe provide economy-wide modeling results of the national and regional implications of two current challenges facing the Australian wine industry: a decline in export demand for premium wines, and a possible change in the tax on domestic wine sales following the Henry Review of Taxation. The demand shock causes regional GDP to fall in the cool and warm wine regions but not in the hot wine regions unless the shock is large. A change from the current ad valorem tax to a similarly low volumetric tax on domestic wine sales causes regional GDP to rise in the cool and warm wine regions, partly offsetting its fall due to the export demand shock; but GDP in the hot wine regions would fall substantially. The switch to a volumetric tax as high as the standard beer rate would raise tax revenue and lower domestic wine consumption by more than one-third, but would induce a one-third decrease in production of non-premium wine as its consumer price would rise by at least three-quarters (while the average price of super premium wines would change very little), hence exacerbating the difference in effects of a tax reform on hot versus warm and cool wine regionsÂ’ GDP.
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Bibliographic InfoPaper provided by University of Adelaide, Wine Economics Research Centre in its series Wine Economics Research Centre Working Papers with number 2010-02.
Length: 30 pages
Date of creation: Feb 2010
Date of revision:
Wine export demand; Wine consumer taxation; Regional economy-wide modeling;
Other versions of this item:
- Kym Anderson & Ernesto Valenzuela & Glyn Wittwer, 2009. "Wine export demand shocks and wine tax reform in Australia: Regional consequences using an economy-wide approach," Centre for International Economic Studies Working Papers 2009-02, University of Adelaide, Centre for International Economic Studies.
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- F18 - International Economics - - Trade - - - Trade and Environment
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
- R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
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