Australian lobby calls for booze tax increase

A lobby group in Australia has suggested that a 10% rise in tax excise on alcohol would bring in an extra AU$2.9 billion a year to help the budget deficit, a call which has been branded “speculative” and “headline-grabbing” by a winemakers’ federation.

The Foundation for Alcohol Research and Education (FARE) – an alcohol health advisory body not dissimilar to Alcohol Concern in the UK – has presented a pre-budget submission in which it says a huge tax haul could be had by raising tax on wine and cider to the same current rate as beer, and raising the tax on beer from 5¢ to 6¢ a glass.

This would generate close to AU$3bn that could then be channelled back into tax relief added FARE.

As reported by the Sydney Morning Herald, FARE added in its submission that adopting the recommendation of the “Henry” tax review from 2010 – where it was suggested alcohol should be taxed according to its alcoholic content – alcohol consumption would drop by almost 10%.

As wine is taxed on price at the moment, although it makes up 40% of all alcohol consumed in Australia, it accounts for just 15% of the tax revenue.

In one of several hypothetical models, FARE said that all alcohol should be taxed at AU$56.46 per litre with the excise rising in line with average weekly earnings not the consumer price index as it is currently.

According to Huffington Post Australia, if implemented the reforms would lead to the price of domestic wine “rocket up” 235%, while even cheaper bottled wine would rise 100% in price.

FARE’s chief executive, Michael Thorn, said that reforming the alcohol tax system was a “no-brainer”.

He added: It would not only address the budget deficit but would be the most cost-effective way to reduce alcohol consumption and the resulting harms, particularly among young people and risky drinkers.”

The call has been strongly rejected by the Winemakers’ Federation of Australia. Chief executive, Paul Evans, said in a statement: “Not only is Australian wine heavily taxed already when compared to our global competitors, in fact we are among the highest taxed in the world today, but the tax rates reflect that alcohol industries are not all the same and this continues to be missed by health lobbyists like FARE.

“The reason why wine is taxed differently and preferentially to other alcohol types is clear cut.

“Wine is different when it comes to our socio-economic input into regional Australia, employment footprint, contribution to export earnings, profitability and access to capital compared to the vastly different brewing and spirits industries and it’s only fair that alcohol tax arrangements reflect this.

“The Federation believes wine must continue to be taxed within the existing WET legislative framework and that any future changes to wine tax arrangements are done so within this framework and not shifted to an excise-based approach as is the case for beer and spirits. The Federation does not advocate how the WET should be calculated.

“Speculative reports in the meantime such as those pushed again and again by FARE, need to be seen for what they are – headline grabbers that will hurt the local industry and will continue to be ignored by governments.”

A recent report by Wine Australia found that the Australian wine industry already contributes AU$40.2bn to the country’s economy and that grape growing, winemaking and wine tourism supports over 170,000 full and part-time jobs.

Alcohol taxation and regulation is an increasingly thorny issue in Australia. Last month around 15,000 people marched in Sydney to protest the draconian licensing laws there.