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Time for volumetric alcohol tax to reduce harm, Australia

The time is right for significant, effective reform of Australia’s current approach to alcohol taxation, with a shift to a volumetric tax the best-supported by current evidence, according to a Perspective published online by the Medical Journal of Australia.

Ms Julia Stafford Executive Officer of the McCusker Centre for Action on Alcohol and Youth andProfessor Mike Daube, Professor of Health Policy at Curtin University in Perth (and McCusker Centre), wrote that there is now “overwhelming consensus from leading Australian and international health authorities and researchers that alcohol taxation is one of the most effective policy interventions to reduce problems related to alcohol”.

“In dealing with harm from alcohol, price matters,” they wrote.

“There is near-universal agreement that the current approach to alcohol taxation in Australia is complex and that change is long overdue. The Henry Tax Review described the alcohol tax system as ‘incoherent’ and the Wine Equalisation Tax (WET) in particular as ‘not well suited to reducing social harm’. Others have described the system less flatteringly.”

WET is based on the wholesale price of wine, not its alcohol content, they wrote.

“The WET is why cask wine can be promoted and sold for as little as 18 cents per standard drink, or $1.80 per litre – cheaper than many bottled waters – contributing only 5 cents per standard drink in tax.”

A volumetric tax that applies to all alcohol products should be central to reform, they said, with tax increasing for products with higher alcohol volumes.

Other recommendations from the authors include:

  • there should be an overall increase in alcohol tax collected;
  • the real price of alcohol should increase over time; and
  • changes to the tax system should not reduce the price of alcohol products, other than for low alcohol products.

“There is an opportunity for health groups to press for comprehensive policies that include a clear commitment to alcohol tax reform. This will require strong and consistent communication of the substantial evidence base for reforming alcohol tax to improve health, as well as appropriate responses to misinformation likely to come from vested interests.”