Alcohol Tax Hurts Us All — Not Just Boozers

Written by:
8 January 2018
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Australians are expected to lose a record $404 billion in taxes in 2017-18. Yet this is not enough for some. Under plans submitted to the Turnbull government by anti-alcohol lobbyists, Australian drinkers would be hit with a $29 billion tax slug over a 10-year period.

The Foundation for Alcohol Research and Education (FARE) has proposed a raft of tax hikes on alcohol in its 2018-19 pre-budget submission to the Commonwealth government. These proposals include increasing the alcohol tax that applies to cask wine, raising the alcohol excise on draught beer, and imposing an across-the-board 10 per cent tax increase on all alcohol.

According to figures provided in FARE’s own submission, these proposals would see 47 per cent of the total cost of a carton of Victoria Bitter made up of taxes.

The anti-alcohol lobby group has justified its measures on both public health grounds and improvements to the Commonwealth government’s budget bottom line. However, there are good reasons to be sceptical of these claims.

It is certainly true that excessive alcohol consumption leads to a range of negative implications, including on individual health, family life, and medical services. These aren’t trivial costs and need to be taken seriously. However, the term ‘personal responsibility’ is not mentioned even once in FARE’s pre-budget submission.

This is disappointing, because no one is forced to consume alcohol. It is a personal choice people make, having regard to both the costs and benefits of such an action.

To suggest otherwise — that people are hopelessly addicted to alcohol — is to infantilise them and pretend as if they do not have the autonomy or capacity to change their behaviour. In effect, this attitude actually excuses irresponsible behaviour.

Australians have for years been inundated with information about the potential negative effects of alcohol consumption. Many understand these negative effects and choose to drink anyway. Some may object to this. But Australians are a free people in a free society, where we are free to make own decisions.

At some point, even lobby groups such as FARE must respect individual autonomy and the freedom for individuals to make decisions that others may object to. Besides, it isn’t even clear that higher taxes on alcohol would lead to a net improvement to health outcomes. Yes, the higher cost of alcohol would reduce consumption of alcohol, everything else being equal. But we don’t live in the world of economic models. We live in the real world where everything is not equal.

As the price of alcohol rises people, particularly those intent on a ‘good time’, will substitute to other substances, some far more potent and cheaper than alcohol.

If the price of booze goes up, many turn to other substances.

Anyone who has been to a music festival where a can of Carlton Draught can cost $15 will have seen this substitution effect in action. This is not a way of excusing such behaviour, but of recognising reality. Any serious analysis needs to take into account such effects.

There are a range of other concerns with the proposed tax hike. It is a heavy handed measure that will affect everyone who enjoys a drink, from a glass of wine with dinner to a beer at a barbecue, not just binge drinkers.

Higher taxes would also disproportionately affect lower income individuals and working families living in Western Sydney, while the proposal to increase the tax rate on draught beer to that of packaged beer would have a negative effect on the hospitality industry, including the employment prospects of many young Australians.

However, what is perhaps more galling about FARE’s pre-budget submission is the claimed benefits to the Commonwealth government’s budget bottom line. FARE claims its proposal will bring $2.9 billion each year in extra revenue.

It also complains that the current differential tax treatment of wine compared with beer and spirits results in about $1 billion in lost revenue per year.

Yet, at the same time, FARE is happy to drain Treasury’s coffers by taking handouts from taxpayers.

According to FARE’s own Annual Financial Reports, the lobby group has received more than a million dollars in taxpayer handouts in the past four financial years alone.
Strikingly, some one-third of its total 2015-16 revenues and other income came from government subsidies. Perhaps rather than slugging long-suffering taxpayers and hardworking Australian families with higher taxes, FARE could lead by example and hand back the millions it has taken from the same people they now want to tax.

Of course, such a course of action would require personal responsibility, something the anti-alcohol lobby isn’t too fond of.

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