An independent report has backed the Rudd government’s 70 per cent excise hike on alcopops but its author says a volumetric tax on alcohol is the way forward.
The report, commissioned by the Howard government in 2006, indicates the $15.3 billion annual social cost of alcohol could be slashed by half if interventions such as higher alcohol taxes, a ban on advertising and more random breath testing were put in place.
David Collins and Helen Lapsley’s analysis of international data on alcohol consumption concluded higher taxes could result in a reduction of the social cost of alcohol abuse of between $2.2 billion (a US comparison) and $5.9 billion (a Norway comparison).
Adjunct Professor Collins, of Macquarie University, said he was confident the international figures could be translated to Australia.
“All the evidence is the demand for alcohol is quite responsive to changes in prices and you can change the price via taxation,” he said.
The report points to a 2008 British Medical Association study that shows 45 per cent of alcopop consumers were unaware of the amount of alcohol in their drinks.
“There would appear to be strong justification for the April 2008 increase in the Australian tax on pre-mixed drinks (alcopops) by 70 per cent,” the authors say.
Prof Collins said some alcopop consumers would move to straight spirits and mix drinks themselves.
“There would be room to fine tune the tax by maybe increasing the tax on these drinks that are being used as a substitute,” he said.
When asked whether he supported a volumetric tax on alcohol he replied: “Yes, I think there is no doubt that would be a good way of distinguishing against the types of alcohol which are subject particularly to abuse”.
Volumetric taxation would see excise calculated on the amount of alcohol in a drink rather than its type.
Health Minister Nicola Roxon has already indicated volumetric taxation was not under consideration as part of the government’s strategy to tackle binge drinking.
The report also suggested claims that boosting alcohol taxes would fuel inflation were unfounded.
“There would be a one-off rise in alcohol prices but a continuing higher inflation rate extending over more than one quarter would be unlikely,” the authors said.
“The increased alcohol tax revenue would, by offering the ability to increase federal government surpluses, provide the potential to reduce inflationary pressures.”
A total ban on alcohol advertising would reduce the social cost of alcohol by $3.9 billion, while a partial ban would deliver a $2.5 billion reduction, according to the report.
Ms Roxon welcomed the report, arguing it was further proof the alcopops tax hike was the right thing to do.
“This is a report commissioned by Malcolm Turnbull’s old Liberal government, and it supports our action on alcopops,” she said.
“We now have health experts commissioned by his government saying that it was justified.”
The federal opposition has indicated it will vote against the alcopop tax increase in the Senate, arguing it is $3.1 billion tax grab.