Australian National Preventive Health Agency calls for volumetric tax on cask wine

Sue Dunlevy
November 01, 2012
News Limited Network

THE price of a four-litre cask of wine would double to almost $27 under a government agency’s plan to overhaul alcohol taxation.

But wine now costing more than $20 a bottle could become cheaper under the plan, which could raise the government around $900 million.

The Australian National Preventive Health Agency will today reject calls for a controversial floor price on alcohol and instead call for a volumetric tax to be imposed on wine, in a major report to government.

The change is part of a drive to wipe out cheap wine that now costs less than bottled water and is blamed for alcohol fuelled violence and problems estimated to cost the community $15 billion a year.

The reform has the backing of the beer and spirits industry and the Australian Medical Association.

A draft copy of the ANPHA report obtained by News Limited finds little support for a minimum price on alcohol.

“The effect of a minimum price would be to increase takings and profits for some alcohol retailers and producers, unlike an alcohol tax increase in which the increased revenue would go to the Government,” the report says.

However it says there is strong support for changes to the current alcohol taxation system “specifically, reform of the wine equalisation tax and the implementation of volumetric taxation”.

Such a change would have a similar effect to imposing a floor price on alcohol but instead of lining the pockets of supermarkets and alcohol retailers it would “create revenue for government,” the report says.

It calls for further work to be done on calculating whether raising the alcohol price will cut consumption.

There are eight different levels of taxation applied to alcohol.

Spirit drinkers pay tax at a rate that is 14 times higher than wine drinkers and beer is taxed at half the rate of spirits.

Wine is unique because it is not taxed according to the volume of alcohol it contains, but instead by its wholesale price.

Some small winemakers pay no tax at all because of a tax rebate.

The Foundation for Alcohol Research and Education has calculated that if wine was taxed at the same rate as full strength beer under a volumetric tax system, the price of a four-litre cask would rise from $15 to $27.

The Winemaker’s Federation of Australia said it opposed “any taxation increase on the wine industry based on social policy objectives for which the case has not been made”.

The Distilled Spirits Industry Council of Australia yesterday backed the plan for volumetric taxation of wine as “simply common sense”.

“Currently, the 7 percent of alcohol consumed as ready-to-drinks pays more in alcohol taxes than the entire wine and cider industries, which is 38 percent of alcohol drunk in Australia,” DSICA spokesman Stephen Riden said.

“If they recommend that wine be bought into the vlumetric tax, then we would support the government giving that serious consideration,” Brewers Association spokeswoman Denita Wawn said.

Michael Thorn, the chief executive of the Foundation for Alcohol Research and Education, said putting a volumetric alcohol tax on wine was “a simple tax reform that has a net benefit to the community and would result in 85 per cent of Australians being better off”.