New study recommends standardised alcohol taxes

December 12, 2018
By Alana House

Researchers at Deakin University have called on the government to reform the alcohol taxation system in Australia.

The researchers noted in an article at The Conversation: “Australia’s current alcohol taxation system is complex and illogical. Most alcoholic beverages are taxed based on their alcohol content, but different rates of tax are applied to different products.

“Beers have the lowest rates, and spirits and ready-to-drink beverages (such as a can of bourbon and cola) have the highest.

“Wine is taxed using a different system (the wine equalisation tax) based on its final wholesale price.

“Under the current system, the total price (including taxation, in 2013 prices) of a standard drink (equivalent to 10g of alcohol) varies from around $0.65 for cask wine to $2.79 for ready-to-drink beverages.”

The researchers modelled the impact of replacing the current system with a uniform volumetric tax, based on alcohol content.

“We applied a tax of 84 cents per standard drink across all alcoholic beverages (beers, wines, spirits and ready-to-drink products),” they noted. 

“This proposed change would have the biggest impact on the price of cask wine, increasing it by more than 120%. The price of beer will increase by 28% on average, bottled wine by around 33%, and ready-to-drink alcoholic beverages by 2.7%.”

They suggest revising taxation would result in a 16% reduction in alcohol consumption across the population and have a “substantial” health impact. 

However, Alcohol Beverages Australia has questioned the results. 

ABA Executive Director Fergus Taylor said Australians already pay among the highest alcohol taxes in the world and the study’s calls for increased taxes overlooked evidence showing these measures don’t reduce consumption among heavy drinkers, who are most likely to be at risk of obesity. 

“A big new tax on alcohol will punish responsible drinkers but it won’t work to deter those at risk of obesity,” Taylor said. 

“If you drink moderately, like 80% of Australian drinkers, alcohol shouldn’t cause you any weight problems and you don’t deserve to be hit with big tax hikes. The risk of obesity can increase for very heavy drinkers, so this is where targeted solutions ought to be directed. 

“The study itself acknowledged the strength of evidence was low with a ‘Low certainty of the effect of reductions in alcohol consumption on Body Mass Index/body weight outcomes due to absence of relevant studies.’” 

Increasing alcohol prices proven ineffective in reducing at-risk consumption

A recent study in the European Journal of Health Economics found when prices increased, heavy drinkers were most likely to continue drinking at the same levels they did previously, albeit choosing a lesser quality product. 

“The people most likely to reduce their consumption in response to population-wide measure such as tax increases are moderate drinkers who aren’t exposing themselves to alcohol-related harm and are not deemed to be at risk of obesity,” Taylor said. 

“Scotland introduced minimum pricing in May and there have been reports since its implementation showing overall consumption has increased and some of the largest increases have been at the cheaper end of the market. 

“People who are drinking harmful levels of alcohol are unlikely to be deterred by higher prices and will instead go to great lengths to obtain alcohol when population-wide measures such as price increases and bans are imposed. 

“Those people represent a very small part of the population and we should be implementing targeted solutions which promote education, intervention and ongoing support for them. 

“More than 80% of Australians who drink, do so drink responsibly, within the recommended guidelines and they should not be impacted by policies designed to address harms among problem drinkers.”

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