Issue 11 / 29 March 2016

HEALTH experts are roundly backing renewed calls for alcohol taxation reform to address excessive and harmful consumption, and to fund prevention and education initiatives.

Writing in the MJA, Ms Julia Stafford, executive officer of the McCusker Centre for Action on Alcohol and Youth, said the failure of governments to act on this issue would “constitute gross irresponsibility”, reflecting words used in a 1977 report from the Senate Standing Committee on Social Welfare raising the alarm on Australia’s major problem with alcohol back then.

With co-author, Professor Mike Daube of Curtin University, Ms Stafford proposed that the current system be replaced with tiered, volumetric taxation and a minimum floor price to prevent alcohol retailers from heavily discounting products. The authors also called for the tax increases to help fund prevention initiatives.

“There is good evidence that even small increases in the price of alcohol make a difference to the level of consumption and the harms associated with it, particularly among younger people and vulnerable communities,” Ms Stafford told MJA InSight.

“This isn’t about stopping people drinking. It’s about very modest change that will still make a difference, particularly to harmful drinking.”

The current alcohol taxation system, described in the 2010 Henry Tax Review as “incoherent”, includes a wine equalisation tax (WET), 16 different excise categories, as well as producer rebates and concessions.

The authors said the WET, which is based on the wholesale price of the wine and not on its alcohol content, was effectively a subsidy that propped up the production of low-value wines.

Ms Stafford said cask wine was frequently promoted by the big retailers at “absurdly cheap” prices to target people who wanted maximum alcohol for minimum dollars.

“There has been a huge turnaround in the market and the big retailers are selling dirt-cheap alcohol,” she said. “This isn’t about pubs and clubs, it’s not about stopping people drinking, it’s not about getting to the average drinker; it’s the cheap product that is going out through the big retailers.”

Dr John Crozier, co-chair of the National Alliance for Action on Alcohol and chair of the national trauma committee of the Royal Australasian College of Surgeons, said he strongly supported the evidence base underpinning the position in the MJA paper.

“We are 30 years behind where we need to be with alcohol related harm reduction in this country. Every year of inaction costs the Australian community $36 billion in patching up the harm after the alcohol industry has profited. That’s $15 billion of harm to the drinker, and $21 billion to those around the drinker,” Dr Crozier told MJA InSight.

“There are 5544 people who will die in Australia this year in consequence of their own drinking, and there are 157 000 who will be hospitalised because of their own drinking – they are huge costs we carry as a nation,” he said.

“These are horrifying statistics. They emphasise the need to get underway with a lot of these long-overdue, reasonable reforms. We can’t wait for the agreement from the industry – the industry will always subvert effective policy.”

Professor Kate Conigrave, addiction medicine specialist at Sydney’s Royal Prince Alfred Hospital and a director of the Foundation for Alcohol Research and Education (FARE), said there was broad agreement among Australian health bodies that reforming alcohol taxation should be a key priority.

“We can’t just treat alcohol like it’s flour or wool,” Professor Conigrave said. “It is a commodity that causes considerable harm in the community and we have to take into account the health perspective, not just the standard business principles of competition.”

In its pre-budget submission, FARE also proposed that the WET be replaced with a volumetric tax on wine and cider at a rate of $56.56 per litre of pure alcohol, and the abolition of the WET rebate scheme.

ACIL Allen Consulting modelling, commissioned by FARE, showed that this approach would raise an additional $2.9 billion in revenue and reduce alcohol consumption by 9.4%.

Professor Conigrave said the WHO listed alcohol taxation and pricing as the most efficient way to reduce harms from alcohol. “Unfortunately, there is a lot of push back from the alcohol industry,” she said. “Governments have to show some leadership and courage to do what they know is best for population health.”

Professor Wayne Hall, director of the University of Queensland’s Centre for Youth Substance Abuse, said there had been sporadic policy successes in tackling alcohol abuse in the decades since the 1977 report – such as the alcopops tax, the introduction of random breath testing and recent reforms to address alcohol-related violence in NSW and Queensland – but, overall, Australia had failed to address the significant harms associated with excessive alcohol consumption.

“Governments of both persuasions have been reluctant to do much other than what appears to demonstrate their concern – media campaigns and expressions of disapproval of various forms of intoxication,” he said. 

“Federal governments have been pretty reluctant to tackle this and the reasons are no surprise. It’s the wine industry, particularly in South Australia,” he said. 

Professor Hall said reform was going to be difficult to achieve in one fell swoop, and suggested that a gradual introduction of reforms would allow the industry to adjust to a more rational system of taxing alcohol.

“With the car industry closing down, one can imagine that any change in tax laws that might be seen as disadvantaging the wine industry will be fiercely resisted.”

All experts that MJA InSight spoke to agreed that an incremental approach to reform would be welcome.

Ms Stafford said it was crucial that reform be introduced appropriately and sensibly. “It should be very well thought through, as we note in our paper, because there are potential problems if alcohol tax was reformed in a way that made alcohol cheaper,” she said. “So incrementally phasing changes in, starting with the WET, could be a good way to go.”


Do you support a volumetric tax on alcohol
  • Yes (81%, 76 Votes)
  • No (19%, 18 Votes)

Total Voters: 94

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4 thoughts on “Volumetric tax best way for alcohol reform

  1. Bruce MESSMER says:


    Whatever form of taxation is placed on alcohol sales, I suggest that there should be a  tax amount, either in the tax proposed or as an additional increment, which  is dedicated to financing the  cost to the health budget of the medical treatment of the complications of alcohol consumption.  This tax increment should not be banked into general revenue but channeled directly into the health budget.

    Furthermore, the same princi[ple should be applied to all tobacco sales.

    The tax could be applied either at the retail counter of at the site of production.

  2. Brian Vandenberg says:

    The comment from “Anonymous on Tue, 29/3/2016 – 21:30” asks an important question – what will happen to the price of high quality wines if the complex WET system is replaced by a simple volumetric tax?  The answer is – nothing probably!  In fact, the tax and final retail price of the best wines will drop under a volumetric system.  That’s because the WET paid on the best quality wine is already much higher than what will be paid on a volumetric tax basis.  It is true that the price of wine made from the glut of poor quality grapes by multi-national producers based along the Murray (i.e. cask wine) will increase in price under a volumetric system, but even average quality wine (e.g. $15-$20 per bottle) will hardly change if it is taxed on a volumetric basis.  Its important that we look at the real evidence of likely price changes before jumping to conclusions that a volumetric tax will increase all wine prices.

  3. philip Childs says:

    The authors comments that a WET propped up the production of low value wines is a partial truth and hides the fact that some of the best quality wines in Australia are made by small producers who only survive because of the WET rebate. If this was removed without another form of subsidy many small producers would be forced to the wall over night. There are hundreds of such producers in all the wine regions of Australia. This is a complex issue and tho’ a volumetric tax seems reasonable it’s introduction w/out devastating the quality end of wine production is complex.

  4. Antony Prochazka says:

    A single volumetric tax on alcohol beverages is a completely logical, coherent and simple reform.

    It therefore has zero chance of getting up. Politicians find such common-sense reforms inherently offensive and will bend over backwards to obfuscate the issue in any way they can, thereby ensuring that any such legislation is not passed.

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