Monday, April 28, 2008

Alcopops: More Tax to Reduce Binge Drinking

The Federal Government has announced an increase on the tax on alcoholic soft drinks (alcopops): they are now taxed as spirits. This corrects an anomaly in the taxation that endured since the introduction of the GST. The price increase amount to 33c-60c+ per bottle, bringing their cost to about $1.30

The Federal Government, using the media, has pushed the line that this will help reduce the incidence of binge drinking among youth, and associated social problems, including violence. But is it enough? I don't think so. Indeed, it really might just be a token gesture, albeit one that will contribute more to government revenue. One hopes it will be spent on preventive measures.


"If (alcohol taxation) were effective (in reducing social problems associated with the over consumption of alcohol), one would expect taxation to reduce the aggregate consumption of alcohol. However, in Australia there is little empirical evidence that this is what actually occurs"

and concluded that
"Ultimately, taxation is too blunt an instrument to effect the government's desired objective of reducing alcohol related social problems."

The Centre for Health Programme Evaluation, in 1992, concluded that

"...there is a very compelling case for a new tax base and for a
very significant increase in the rate of tax."

That is, a change in the way that alcohol is taxed, perhaps to volumetric taxation, and that there should be a large increase in dollar terms of the amount of taxation. There are many different interest groups - bottled wine makers; cask wine makers; spirits; beer - some of which would see their prices rise significantly if there were volumetric taxation. The method of taxation needs to account for consumers who will choose the "cheapest" or "most popular form" of alcohol on which to binge-drink. It will not be an easy task.


"Want a tax cut ... drink less!"