Alcohol pricing and taxation

International scientific evidence consistently shows that alcohol consumption and harm are influenced by price. Alcohol taxation, as a means of increasing the price of alcohol, is one of the most effective policy interventions to reduce the level of alcohol consumption and related problems, including mortality rates, crime and traffic accidents. Even small increases in the price of alcohol can have a significant impact on consumption and harm. However, despite its reported effectiveness, taxation as a strategy to reduce alcohol-related harm has been under-utilised in Australia. From a public health and economic perspective, the current alcohol taxation regime in Australia is significantly flawed. While there are some positive aspects to the current regime, such as the relatively lower rate of tax on low alcohol beer, there are large inconsistencies in the way different alcohol products are taxed; products are not consistently taxed according to their alcohol content level, nor their propensity to cause harm. The recently released report on the review of Australia’s tax system (‘the Henry Review’) concluded that “current taxes on beer, wine and spirits are incoherent”.

Principles for reform of alcohol taxation

NAAA has developed principles for reform of the alcohol taxation system in Australia with the primary objective of reducing harm and promoting a safer drinking culture:

  1. Taxation of alcohol should be based on the principle that alcohol is no ordinary commodity. It is a product responsible for major harms in our community.
  2. Alcohol taxation is one of the most effective ways to reduce alcohol consumption and associated harms-and is especially effective if part of a broad-based health strategy.
  3. The approach to alcohol taxation should be volumetric, with tax increasing for products with higher alcohol volumes.
  4. The alcohol taxation system should have the capacity to target alcohol products deemed to be of higher risk, or creating additional harms in the community.
  5. There should be an overall increase in alcohol taxation.
  6. The real price of alcohol should increase over time.
  7. Changes to tax should not be designed to produce a decrease in price for alcohol products, other than for low alcohol products.
  8. To complement volumetric tax on alcohol, there is also a need to regulate the minimum price (or floor price) of alcohol products.
  9. A proportion of alcohol taxation revenue should be hypothecated to prevent and reduce alcohol-caused harm in the community.