Increased taxation on Australian wine to reduce youth alcohol consumption and health costs

Australian Tax on Wine

Business Submission - Australian Tax on Wine

With the Australian government seeking to impose additional taxation upon the use and sale of wine, there have been many outcries of indignation arguing how this would affect the Australian wine industry, and eventually the Australian economy. However, what needs to be considered are the consequences and the public cost of continuing with the discounted taxation to which wine makers in Australia are currently subjected to. The effect on the Australian GDP needs to be taken in to account with the harms that alcoholism in the increasingly youth population is set to unleash, if made available readily and at subsidized prices.

The risks and problems that have arose from the increased alcohol consumption by the Australian public in recent years, especially the young generation, point towards a possible increase in the health deterioration of most Australians while also impacting the economy in an adverse manner. As it is a proven fact that the consumption of alcohol is, in fact, a vice in the society that can create havoc over a nation if its power, consumption and authority are not brought under increased control. Although the consumption of alcohol is witnessed in almost most cultures of the world, this problem has left evidence and support for the Australian community that acts as a support for the fact that the consumption of alcohol should be reduced by acting in an efficient manner, without creating uproar amongst the members of the public. The toll for deaths caused as a result of alcoholism in Australia in 2009 peaked to 60 members of the society per week (Shepherd, 2009). I am a political lobbyist hired by the Australian National Preventive Health Agency in order to advocate the imposition of taxation on wine, which will as a result increase the prices of cased wine, beer and other spirits to reduce the implications caused by excessive alcoholism in the country.

Background Information of the Australian National Preventive Health Agency

The Australian National Preventive Health Agency was established in 2011 and operates with the slogan, 'Promoting a Healthy Australia', in line with the Australian National Preventive Health Agency Act of 2010, in order to instigate national policies regarding preventative health measures. It strives to create a healthier Australia, where any possible health issues might be tackled first hand by the use of preventive methods as precaution. The government of Australia established this agency so that the infrastructure and the investment in the preventive health care system in the country can be made strong and more awareness can be created amongst the masses for the need to stay preventive in terms of health problems (Government, 2011). The agency has its strategic goals and the mission statement set out based on the Australian National Preventive Health Agency Act of 2010. Within the scope of those goals, the agency intends to promote and assist the government in establishing preventive health care public policies on a national level., while also reducing the risk of possible loss of health by running advice and leadership programs in relation to the preventive health care, spreading more knowledge regarding the important health issue and guiding towards maintaining a healthy lifestyle in order to avoid any health issues in the future. The agency also aims to aid in the gathering of statistical data regarding the health issues and concerns throughout the country and make such data and reports available readily for all members of the country. Therefore, the policies that this agency promotes and presents to the government target the promotion of avoidance and prevention of any issues in the society that can lead to adverse health problems in the future.

Developments to Date

When all alcoholic products that are available in Australia are compared in terms of pricing and taxation, we become aware of the facts that the taxation on the prices of wine is one of the lowest comparatively and while other alcoholic beverages such as beers and spirits are charged tax based on the volume level of alcohol present in the drinks, wine is given a special treatment by the government as it is taxed like other common commodities on the wholesale price of the drink. Additionally, there exists a rebate for wine producers to an extent of $1.7million from wine sales, which provides increased tax exemption to most small wine producers in the country. Wine is the leading alcoholic beverage consumed in the country as it is part of the formal as well as the informal drinking culture of the country. Thus, it has not been easy for the government to impose high taxes on its pricing. In 1970, an excise duty tax of 50 cents per gallon was imposed on wine. However, this proved to be infamous for the government, and was reversed back in 1972. Subsequently, the goods and services tax (GST) of 10% was introduced in 2000 on the prices of wine (Anderson, 2010). This tax has remained a part of the price of wine in the country till date, and since it is comparatively low, the consumption of wine has shown an increase in recent years. In 2009, the Henry Review Panel, which was setup by the government to review upon the pricing and taxation system of the government, submitted its report which included several recommendations pertaining to the taxation of wine (Henry, 2009). Although, in its reply to the report, the government mentioned that it was willing to place higher taxes on wine in the future, it avoided placing any taxes based on the recommendations immediately (Swan & Rudd, 2010).

Proposed Solution

As a representative of the Australian National Preventive Health Agency, the proposal that would be presented here would be in the light of the mission and goals of the agency and the Australian National Preventive Health Act of 2010. As stated earlier, the problems that are related to alcohol consumption are too high and must be dealt with in proper manner by the government of Australia. One such method is to reform the prevailing alcohol taxation system in the country. These reforms must change the current wholesale tax wine into a volumetric-based tax, where level of wine in a bottle must be the key assessor of the price of wine. This would increase the current prices of wine and could thus result in a decrease in demand. To counter the problem of affecting the wine and grape industry adversely, the government should promote the exports of wine to other countries by subsidizing tax on export, reducing custom duties, and allowing the manufactures of wine in the country to reduce prices of wine that is exported in order to attract importers. Moreover the prevalent method of the Australian government to adjust the excise duty tax on wine based on the Consumer Price Index (CPI) every six months must be continued to ensure the prices of these beverages do not fall down to a level where it becomes affordable and cheap for the Australians.

Evidence in Support of Proposed Solution, Counter Arguments and Responses

There lie huge amounts of support for the proposed solutions to decrease the consumption of alcohol in Australia. Firstly, the World Health Organization itself recognizes the fact that control over the consumption of alcoholic beverages such as wine can be maintained by using an effective alcohol taxation policy system (WHO, 2007). Secondly, with the Australian wine industry being old and vast, it has potential to produce good quality wine and export most of its products as there is a high demand for Australian wines across the globe, which is evident from the fact that Australia is the fourth largest exporter of wine (ABS, 2013). The arguments against the proposed solutions are primarily built up by the consumers of wine who would naturally not support the proposals. They present the ideas that the Australian National Preventive Health Agency, an agency established by the government is an 'anti-development radical environmental activists' organization who is utilizing the taxpayers' money for personal gains (Andrews, 2013). However, such claims can easily be falsified and are only being created so that the frequent drinkers in the country are not stopped from their regular consumption levels, which would eventually grow to catastrophic levels.

Conclusion

Alcohol has proven to result in many domestic problems for individuals and the society on national level. Therefore, the negative side of the consumption of alcoholic beverages, such as wine and beer, sheds light on the problems that arise from this. The health of a person is a major thing that is affected by alcoholic consumption, and thus requires individuals to prevent or decrease the consumption levels. However, like every other drug, alcohol is difficult to quit or decrease, and in case of Australia where consumption is one of the highest in the world, it is near to impossible for majority of the Australian public to protect their health and prevent any health problems to arise from high consumption. Therefore, it lies in the hands of the Australian government to reduce the alarmingly high levels of consumptions in Australia. Imposing high taxes is one of the most effective methods as it increases the prices, making wines and beers expensive for consumers, and thus decreasing the demand of these drinks drastically.