Industry: Radical Alcohol Tax

The end of cheap beer: radical alcohol tax plan put to government. Australians would pay $2.9 billion in extra taxes while reducing their consumption of alcohol by an estimated 9.4 per cent.

Cheap schooners and pints at the pub would be a thing of the past under a radical tax hike proposed to the Turnbull government by anti-alcohol lobbyists.

The excise on all alcohol would rise by 10 per cent, while the tax on draught beer – discounted since 2001 – would be lifted to match that imposed on packaged beer at bottleshops.

On current settings, that means the tax on light beer at pubs would increase more than five-fold, while tax on mid-strength ale would double and tax on full-strength lager would increase by 50 per cent.

Altogether, Australians would pay $2.9 billion in extra taxes while reducing their consumption of alcohol by an estimated 9.4 per cent, according to a pre-budget submission by the Foundation for Alcohol Research and Education.

While the foundation routinely calls for an increase in alcohol tax, this year it has set its sights on tap beers it believes are under-taxed and contributing to an $11 billion a year impost of excess alcohol consumption.

“Beer is beer is beer, and the tax should apply equally to all products irrespective of what form it comes in,” said the group’s chief executive, Michael Thorn.

According to a recent Deutsche Bank analysis, Melbourne was the equal eighth most expensive city in the world for a pint of beer at a bar, with Sydney equal 20th (measured in US dollars).

Unlike previous submissions, the foundation is pitching the $2.9 billion tax hike as a savings measure, calling for only $27.5 million to be put back into preventative health and allowing Treasurer Scott Morrison to bank the rest.

“The alcohol industry has done a terrific job in promoting the idea that we’re over taxed,” Mr Thorn said, adding that the costly consequences of drinking – including deaths, car accidents and crowd control issues – had been on full display this summer.

“These are not insignificant costs that are being borne by the taxpayer today as a consequence of drinking, let alone all the social costs that are attached to that – the disruption to families, the impact on employers, reductions in productivity,” he said.

Mr Thorn also said there was a “strong case” for state governments to ban happy hours at pubs to discourage binge drinking.

The head of the Australian Hotels Association, Stephen Ferguson, could not be contacted on Wednesday but the pub group’s position is that draught beer already contributes healthily to public coffers because of excise and the Goods and Services Tax.

Its previous budget submission said just 19 per cent of alcohol was consumed in bars and pubs, which had the benefit of regulation, trained staff and a social environment.

The AHA warned any increase in excise, when combined with the GST, “would act as a virtual payroll tax for the federal government and would inevitably lead to a drop in employment and other economic activity”.

Part of the attack on draught beer is inspired by the rise of craft brewers, who have complained about the favourable tax treatment afforded to keg beer, which is dominated by big brands such as Carlton and Tooheys.

In its submission, the Foundation for Alcohol Research and Education said the tax discrepancy was “unfair” to boutique brewers and “distorts the market to reward economies of scale”.

Mr Thorn conceded higher taxation on booze was not popular, but he said the same concept was broadly accepted as a way to reduce rates of smoking, even among smokers themselves.

“This is not an easy argument to win, although it should be easier than it is,” he said.


This article courtesy of Michael Koziol. For more articles by this author click here.