Tuesday, September 24, 2013

Alcohol and taxes: a wet mess?

The ABS have released data on the Apparent Consumption of Alcohol from 2007 to 2012. Per capita consumption actually declined in 2011/2012 to the lowest level in a decade at 10.05 litres. An interesting aspect is the fall in RTD consumption following the 'alcopops tax' in 2008.

It was widely reported that the 'alcopops tax' had failed to deter binge drinking. This was based on a study of alcohol related admissions to Gold Coast hospitals however it isn't clear to me that this is necessarily a good or complete indicator of positive health benefits.

It was claimed that drinkers would simply switch to spirits and mixers but this doesn't seem to be reflected in the numbers with consumption falling in that entire sector following the tax. The entire sector had grown substantially in the decade before separate reporting of RTD's. Pigovian taxes work!

Following lifestyle trends the growth sector over the last 50 years has been wine. Wine is also the sector least taxed and also the only beverage taxed on price rather than alcohol volume. As previously posted this creates an obscene anomaly in taxation of wine casks which is also the most widely abused: Eclipse of the wine cask long overdue

Despite overwhelming evidence politics continues to trump good policy on alcohol taxation. There is a rather scathing assessment of the impacts of the wine equalisation tax from Adelaide wine identity Philip White: wine equalisation tax unequally wet
Neither should they be forced to compete with ethanol refiners – barely taxed at all - who use enormous amounts of water mining the Mallee for sugar, and wreak environmental, social and economic destruction at both manufacture and consumption ends of this nasty, depressing chain.

Further links: Foundation for Alcohol Research & Education

NAB: Australian wine market

TAI: The liquor industry

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