The Senate Chamber needs a large “It’s the taste, stupid” sign when debate resumes today on the Alcopops Tax Bill. The Bill seeks to increase the tax on alcoholic soft-drinks or “alcopops” by 70% from $39 to $66 per litre
Last night, the Coalition confirmed it would oppose the bill, leaving the door open for a “show me the money” call from the Greens and Independents who want the Government to make specific commitments to alcohol harm reduction measures, including hypothecating a proportion of the tax, in return for their support.
The debate around this bill has highlighted some of the confusion around alcohol policy in Australia and created some curious alliances between the Baptists and the bootleggers. For example, in the Senate Inquiry Report into the Bill (tabled yesterday) a proposal for a volumetric tax on alcohol came from both the alcohol industry (specifically the distillers) and some health groups.
A volumetric tax (where tax is proportional to alcohol content) may make intuitive sense and in practice can work when applied within one section of the alcohol market, e.g. taxing light beer at a lower rate than full-strength.
However, a volumetric tax will do little or nothing to combat the specific harms associated with products such as alcopops.
Advocates of a volumetric tax — which included some Liberal Senators in last night’s debate — overestimate the influence of price on consumption, and underestimate the effect of other factors, such as taste, image and environment. When seeking to reduce the harms associated with alcohol use, these issues are crucial.
For better or worse, alcohol is an integral part of our culture. This means that alcohol consumption is intricately bound up with individual and community identity and cannot be reduced to a simple transference of alcoholic units in the most cost-effective manner possible. Just like preferences in the areas of fashion, art and music, individuals’ alcoholic consumption patterns are governed by a complex array of social norms and customs.
If the price of opera tickets goes up, no-one expects opera buffs to trade in their subscriptions for a season pass to their local hip-hop club. Neither should we expect people’s tastes in alcohol to switch at a wave of the Treasurer’s wand.
Those who oppose the alcopops tax argue that by increasing the price of these products, relative to other beverages, demand will simply shift to other areas of the alcohol market, such as wine and beer.
They are asking us to believe that in response to alcopop tax increases, 15-year-olds will ditch their Blueberry Breezers and instead be racing behind the shelter shed at lunchtime for an illicit swig of a cheeky 2003 Pinot Noir. Of course, in reality this is as unlikely as a member at the Melbourne Club forgoing his pre-prandial single-malt in favour of a Pineapple Cruiser, on the basis of some comparative unit-pricing.
While all alcohol can cause harm when consumed in unsafe quantities and in an unsafe manner, there are some products which are more likely to be associated with harms than others. The Government has provided solid evidence that these include alcopops.
An alcopop is not simply a Gin and Tonic with food colouring. Alcopops look different, taste different and are attractive to new groups of alcohol consumers. Never before have there been alcohol drinks as popular with young people as alcopops.
Alcohol researchers estimate that around 70-80% of alcohol consumed by 14-17 year-olds is in the form of alcopops. Between 2000 and 2004, the percentage of girls aged 15-17 who reported that an alcopop was the last alcoholic drink they consumed increased from 14% to a staggering 62%. The rapid growth in these products is a phenomenon that has never before been observed within the alcohol market.
Young people are particularly vulnerable to alcohol-related harms, both short and long term. They experience high rates of alcoholic-related violence, including motor vehicle accidents and assaults, and new research indicates that alcohol consumption at this stage of life can significantly increase the lifetime risk of alcoholism. This makes the need to reduce alcohol consumption by this age group a high priority.
Alcopops are a new class of drinks that requires a new health policy, taxation and regulatory approach. A volumetric taxation would simply place alcopops on a continuum with other alcoholic beverages and not address the specific problems associated with consumption of these products.
A policy which is aimed more at reducing alcohol-related harms and less at establishing equal rights for all alcoholic drinks, should clearly be focussed on making alcopops less attractive to young people. As one of the most price-sensitive groups of consumers, targeted taxation increases are one important way this can be achieved.
If the Coalition, minor party and independent Senators have a genuine interest reducing the harms associated with unsafe alcohol use, when debate on the Bill resumes today they should have a stiff drink and admit the Government has got it right on the alcopops tax and that the idea of a volumetric tax is a fizzer.