If politicians were fair dinkum about believing that the price mechanism is the best way to reduce alcohol consumption, they would not be fiddling around with what rate of excise should be applied to sweet and fizzy alcopops – they would be hopping right in and changing the way that wine is taxed.

Beer and spirits in this country are both taxed on the basis of the amount of pure alcohol contained in the drink, with spirit drinkers being slugged considerably more for their booze than beer drinkers.

Whisky, gin, rum and other spirits — including after this week those alcopops — have an excise of $66.67 per litre of alcohol content. (There is a slight reduction for brandy drinkers where the rate is $62.25 per lal).

With beer (in cans and bottles) that is stronger than 3.5% alcohol by volume, excise is levied at $39.36 per lal, by which the percentage by volume of alcohol of the goods exceeds 1.15%

There is a lower rate for bulk beer and for those beers with an alcohol content below 3.5% but let’s not confuse ourselves with those.

For the best-selling beers like VB, the formula works out that the government slug is around $29 for every litre of alcohol – substantially less than paid on spirits including the dreaded alcopops.

With wine, the tax regime is based not on alcohol content but on the price it is sold at to retailers. The wine equalisation tax (WET) is 29.5% of the value. On cask wine that retails for around $12, for four litres of wine normally containing about 10.5% alcohol by volume, the tax works out around $5 per lal! No wonder then that the alcoholic on a budget gets stuck into the wine casks.

If wine was taxed in the same way as beer, the tax alone on a wine cask would be greater than the current total selling price! The good news of that form of taxation would be that expensive bottled wine would become cheaper.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey