Oz alcohol tax hike could generate AU$2.9bn

A 10% increase in tax across all alcohol categories in Australia would boost public revenues by AU$2.9 billion and cut consumption by 9.4%, new research has shown.

For its Budget Submission 2016-17, the Foundation for Alcohol Research & Education (Fare) commissioned an economic modeling report by ACIL Allen Consulting, showing that a “bold alcohol tax increase” would significantly increase public revenues.

“Reforming the alcohol tax system should be a no-brainer,” said Michael Thorn, chief executive of Fare. “In fact nine separate Government reviews have recommended we do exactly that.

“Increasing taxes on alcohol would not only address the budget deficit but, as research shows, is also the most cost-effective way to reduce alcohol consumption and the resulting harms, particularly among young people and risky drinkers.”

Fare claims that if additional revenues resulting from alcohol tax increases are reinvested in Australia’s health system, then this could “further reduce the growing burden” of alcoholism.

The company also claims revenue should be directed to “addressing the social costs of alcohol in Australia”, which would then alleviate pressure on health services.

In its Budget Submission 2016-17, Fare also proposes taxing wine and cider according to abv, bringing these categories in line with beer and spirits. This should be ahead of a 10% tax increase for alcohol across the board, the organisation claims.

“Replacing the way in which wine is taxed in Australia would ensure a fairer tax system where wine, which currently represents 40% of all pure alcohol consumed but only 15% of alcohol tax collected, pays for its share of the resulting alcohol harms,” said Fare.

The firm also claims the proposed changes would “have minimal impact on moderate drinkers, with a can of premixed spirits increasing by 16.7 cents on average.

Thorn continued: “Reform of Australia’s alcohol tax regime is long overdue and by wisely directing a proportion of that revenue we can start to address the high social cost of alcohol in this country.

“We can reduce the high levels of alcohol-related family violence, we can reduce the incidences of Fetal Alcohol Spectrum Disorders, and we can start to tackle this preventable health burden that is currently shouldered by the entire nation.”

There are around 50 distilleries in Australia producing gin, vodka, and whisky, rum and other spirits. Taxation on spirits in Australia is among the highest in the world, with around 50% of the cost of a bottle going to the government.