Saturday, 4 April 2009

A Lesson from Australia

Last April the Australian Government slapped a 70% tax increase on RTD's ( Ready to Drink) or to you and me, alcopops. The aim was to curb youth binge drinking, allegedly fuelled by such things. It has been successful in one way, in that it saw a drop in sales of alcopops, as youngsters turned to other drinks to fuel their alcoholic desires. Beer sales rose.

Now the party is over. The Australian Senate has ruled that rather than a genuine attempt to curb binge drinking, it was merely a tax grab. In a March vote they overturned this, costing the government AUD 1.6 billion (EUR 835 million) which it had expected to collect from the increase in tax over the next four years. It may also mean the government will have to hand back an estimated AUD 300 million (EUR 156 million) it has already collected since it gazetted the law last April.

Now I rather thought all governments were just tax grabbers, but maybe that's just me. The Australian Senate is obviously made of more thoughtful stuff. But it shows that when you tinker with alcohol duty to attempt one outcome, you are just likely to shift the problem elsewhere, leaving the taxpayer to foot the bill.

I hope HMG is aware of this and taking note.


Curmudgeon said...

This illustrates the risks of alcohol taxation that seek to discriminate between different types of product - see this piece which explains it very well.

Paul Garrard said...

Alcohol tax is alcohol tax, full stop. You don't solve social ills by taxation.

Tim said...

Australian Alcohol tax and excise laws need to be overhauled. They have different bandings dependednt on the form of the alcohol and the strength.
Small vineyards also get a tax concession (WET) on their first $1 million turnover which is not available to microbreweries.
Hence we have a massive glut of cheap wine, and a premium beer market arising from a non viable industry.

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