Australian Tax on Alcopops
The Australian government has placed a special tax on alcopops to
combat binge drinking, particularly in young people. Here, Geoff Munro,
National Policy Manager of the Australian Drug Foundation, describes the
politics of the move, and the outcome.
In April 2008 the Australian Government applied a special
excise to premixed spirits, “alcopops” or ready-to-drinks (RTDs).
Consequently the tax on the spirits component of RTDs rose by 70%, from
A$39.36 to A$66.67 per litre of alcohol, the same rate as for bottled
spirits. The tax, that the government said was aimed at countering binge
drinking by adolescent females, added about A$1.30 to the price of a
single RTD bottle or can. Premixed spirits are the fastest growing
segment of the alcohol market in Australia and are implicated in
dangerous drinking by young people. Spirits industry sources say RTDs
expanded by 36% over four years (1). Sixty per cent of female drinkers aged 15- 17 consumed an RTD in 2007 compared to 14% in 2000(2)
and unpublished official data showed RTDs are consumed by over 70% of
male and female teenagers who drink at the highest risk of immediate
harm(3).
As the government lacks a majority in the Senate, and the tax
was opposed by the conservative parties, the issue turned into a cause
celebre amidst intense media interest. An alarmed spirits sector, led by
the Distilled Spirits Industry Council of Australia (DSICA) campaigned
vociferously against the measure. The campaign included a stream of
media releases, a dedicated website, mobile billboards, and the feeding
of “anti-tax” and “antiwowser” stories to sympathetic journalists and
talkback radio hosts. A senior journalist told the author the force of
the industry’s lobbying effort was unprecedented in his experience.
Health advocates tried to counter by disseminating accurate information
about the known impact of the tax (see below), critiquing the spirits
industry’s erroneous arguments and publishing statements of support for
the added excise.
Alcopops sales declined by 29% between May 2008-January 2009,
equivalent to a reduction of 310 million standard drinks in the RTD
format while spirits and beer sales increased by a combined 160 million
standard drinks, resulting in a net decrease in alcohol sales of 150
million standard drinks over the period(4). It is too early
for a definitive judgment, but if adults are primarily responsible for
the additional sales of beer and spirits the tax may be working as
intended to reduce the drinking of the youngest underage drinkers for
whom alcopops are the favoured beverage.
On March 18 2009 the Senate rejected the tax by a single vote.
If the government still has an appetite for alcohol reform it can try
to renegotiate with the recalcitrant senator, or include the RTD tax
excise in the annual budget appropriations bill that will gain
parliamentary approval. So the fate of the tax remains uncertain.
Astonishingly, DSICA and other industry representatives argued
the tax increased alcohol harm because “drinkers [are] switching from
RTDs to cheaper, more potent drinks [i.e. spirits] that increase the
likelihood of binge drinking” (5). This extraordinary
admission concedes their basic product, full-strength bottled spirits,
is unsafe because it encourages dangerous drinking. Even if the spirits
industry is successful in defeating the RTD tax it has dismantled its
defence against a host of future controls on the marketing and sale of
spirits.
References
(1) Broderick G. Teen boozing. The Mercury, 27 August 2007.
(2) Australian Bureau of Statistics. Apparent Consumption of
Alcohol, Australia, 2005-06 (Cat No. 4307.0.55.001), Released 25.06.07,
ABS, Canberra, 2007.
(3) Stark J. Pre-mixed spirits favoured by binge drink teens. The Age, 15 September 2007.
(4) Walton M. Standard drinks consumption. What’s happened since the RTD tax excise increase? The Nielsen Company, 2008.
(5) McShane M. Beware consequences of alco-flop tax. Adelaide Advertiser, 18 July 2008.