Tuesday, September 06, 2011

Tax wine as beer. Please.

What we pay now:

Tax or excise per standard drink

Bottle from small winery: 0

Cheap wine cask: 5 cents

Full strength beer: 39 cents

Premium wine bottle: 49 cents

What we would pay:

All wine, all beer: 39 cents

Extra tax revenue: $1.5 billion

Cut in cask wine sales: 61%

Cut in total alcohol sales: 9%

Alcohol Taxation Reform, Allen Consulting Group for the Alcohol Education & Rehabilitation Foundation

Taxing wine in the same way as beer would net the government an extra $1.5 billion.

At the same time it would cut sales of cask wine 61 per cent, boost sales of beer, and cut overall alcohol consumption 9 per cent.

The plan, tested in economic modelling by the Allen consulting group, will be unveiled at a forum in parliament house today designed to pressure Treasurer Wayne Swan in the leadup to the October tax summit.

Allen Consulting has told the Alcohol Education & Rehabilitation Foundation that taxing wine on the basis of price, while beer is taxed per unit of alcohol means men can use cask wine to exceed health guidelines for “a little over a dollar” while women can drink to excess for 50 cents.

“The existing wine tax arrangements allow individuals who are seeking to consume
alcohol irresponsibly to do so cheaply,” the Allens report says... “Incongruently the regime also applies tax more heavily to individuals looking to purchase quality wines for the purposes of responsible consumption. The consequence is that irresponsible drinkers contribute little to the taxation revenue necessary to address alcohol related harm in the community, whilst responsible drinkers do.”

The change proposed by Allens would double the price of cask wine and lift the price of premium bottles 17 per cent. It would remove the rebates enjoyed by small wineries, which Allens says larger wineries rort, “turbo charging” the wine glut.

The Allens proposals are similar to those put forward by the Henry Tax Review.

Mr Swan rejected the recommendation saying his government would not change alcohol tax “in the middle of a wine glut and where there is an industry restructure underway”.

But the Allen’s paper says the present tax system exacerbates the wine glut by encouraging production “on the basis of volume as opposed to value”.

Alcohol Education & Rehabilitation Foundation chief executive Michael Thorn said the report shows Mr Swan’s argument to be hollow.

“The wine industry itself is trying to drive production from warm climate to cool climate regions because that’s where the value is. A tax system which encourages volume rather than quality slows that down,” he told the Herald.

“We want this discussed at the tax forum. There are no public health sector representatives on the invitation list, so it’ll be up others. It makes sense.”

Published in today's SMH and Age

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