If only all tax increases were this easy. The Federal Government introduces a surprise tax rise, and actually gets applauded for it.

Then again, it’s rare that the impact of a tax is primarily on young women, many of them below voting age, who are being demonised as binge drinkers (cue the usual file footage of semi-conscious teens staggering around, or belting each other). They’re unlikely to get a particularly sympathetic run in the media.

Especially when you’ve got heavyweight handwringers like the Alcohol and Other Drugs Council, and the Australian Drug Foundation, cheering the Government on, and it’s only days since the 2020 summit Health stream recommended higher sin taxes.

We’ve still yet to see any evidence that binge drinking is now any worse than in the past, when Passion Pop and rum’n’cokes, rather than RTDs, were the chick drinks of choice. But the debate has moved beyond that. The middle-class wowsers, keen to demonstrate their moral superiority, have politicians and the media convinced our yoof are going to hell in an alcohol-laden handcart. Not that either group, for their separate reasons, ever needed much convincing.

So that’s $500m a year in extra revenue for the Government, and the only dispute is over whether the Howard Government should’ve done the same a few years back. Nice work.

What’s alarming is that the Government felt compelled to justify the tax rise by declaring that a “significant proportion” of the revenue would be directed to the new black in health funding, preventative health programs. The concept is called “hypothecation” and it’s on the rise as politicians try to defend unpopular taxes. Apparently – and there’s no evidence to actually demonstrate this – taxation is considered more palatable if the revenue is directed into programs related to the area being taxed.

The transport industry and petrolheads have been at it for decades, arguing that more petrol excise should be spent on roads. Road safety campaigners have pushed for revenue raised from traffic infringements to only go to road safety programs. The health sector have been pushing for higher taxes on alcohol for years to fund more health spending, and the idea got another go round at the 2020 summit.

But it’s voodoo tax policy. People who want existing taxes redirected to their preferred cause are just like any other rent-seeker or lobby group, except they’re hiding behind some fake notion of fiscal justice. And they never explain what school or hospitals should be closed to cover the reduced funding that, say, more road expenditure would require. Proceeds from the Medicare levy don’t quite stretch to cover the nation’s health budget, for example.

And if there’s additional revenue, then all stakeholders should have the opportunity to argue where it would be best spent, not just the nanny-statists determined to stamp out recreational activities they disapprove of. If there’s a case for more spending on preventative health – and there is – then it should be funded from general revenue, not linked to specific taxes. That just reduces spending and policy flexibility for governments and establishes meaningless linkages.

And in any event, the people likely to be forking out this additional $500m a year are unlikely to care either way where the money is spent.

Download Bernard Keane’s take on the new tax via Crikey Podcasts here

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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