The National Preventative Health Taskforce and the Henry Tax Review have recommended that the current method of wine taxation in Oz be replaced by a system of taxation according to its alcohol content, similarly to how beer and spirits are taxed.
Groups advocating the revision of the wine taxation system say taxing wine according to its alcohol content would increase annual revenue by $1.3billion and reduce alcohol consumption by 1.3 per cent. According to a model published in the Medical Journal of Australia, it would also result in a saving of $820 million in health care costs because of the reduction in harmful consumption.
The number of people drinking wine at dangerous levels has become problematic and with the cheap cost of wine, even the very poor are able to get drunk on wine, further fuelling their problems.
Previous studies have revealed that the elderly in particularly were falling victim to problematic drinking of cask wines which is cheaper than most other drinks, including some bottled waters.
The Henry review has called the current arrangement “incoherent”, this arrangement charges an excise as low as 10¢ per standard drink of fortified wine. For other liquors like spirits and premixed drinks the excise is almost eight times more.
Researchers modelled the impact of four changes to alcohol taxation and came to the conclusion that taxing wine on volume was the most “politically feasible” route although there may be other methods which could raise more revenue and produce greater reductions in alcohol-related harm.
Although groups are urging the government to take legislative action against alcohol harm being fuelled by cheap wine, a spokesperson for the Treasurer Joe Hockey said the Coalition had no current plans to implement such changes.
According to the spokesperson, the government will be conducting a white paper process for real tax reform that will lay down a new tax agenda that will be presented to the Australian people to approve at the election before any changes to the tax are made.
The following except from an article on Smh.com.au explains more about the call and the government’s position on the subject:
Leading up to its 2011 tax forum, the then Labor government committed not to change alcohol tax in the immediate future, citing a wine glut and industry restructuring.
But Greens Senator Richard Di Natale said an overhaul of alcohol taxation was overdue, because under the current system some wine was cheaper than bottled water.
”We’ve got a system that’s a dog’s breakfast – it’s bad for the industry and it’s bad for people’s health,” he said.
Senator Di Natale said the current system under which wine is taxed on value encouraged the production of high volume, low quality products, which had harmed Australia’s international reputation.
Winemakers’ Federation of Australia chief executive Paul Evans said the federation did not support any tax increase, because it would harm the industry and would not be effective in reducing alcohol abuse. He said a tax increase would penalise the vast majority of responsible drinkers, but there was evidence risky drinkers were not sensitive to price rises.