New Year's Eve brought more alcohol-related violence, again prompting claims -- this time
by Australian Drug Law Reform Foundation head Dr Alex Wodak -- that alcohol is too cheap. That was the message
in the lead-up to Christmas and one that is repeated predictably
after every high-profile "king hit".
But the effectiveness of tax in reducing binge drinking is not clear.
Cancer Council Victoria CEO Todd Harper says that for every 10% increase in in cost there is a 5% decrease in alcohol consumption. "The evidence of what works in reducing harm shows price is critical, the most important element," he told Crikey.
But while overall consumption of alcohol is reduced when prices rise, research shows
heavy drinkers merely reduce their consumption in between binges. A working paper cited in the same report found only two in 18 studies show heavy drinkers to be responsive to tax. So while overall consumption decreases, binge drinking among heavy drinkers does not.
Australia is a case in point. Since 1990, the price of alcohol has grown 16% above CPI
, and overall rates of consumption are down. But as public health advocates are quick to tell you, binge drinking hasn’t abated.
The rates of tax Australians pay on beer
and alcoholic beverages
are among the highest in Organisation for Economic Co-operation and Development countries, according to the Australian Tax Office. According to a University of Adelaide study
, beer and spirits are priced about seven times and twice the OECD unweighted averages, respectively.
Then there’s wine. Public Health Advocacy Institute director and Curtin University Professor Mike Daube told Crikey
: "You can by wine at $2/$3 a litre ... That’s cheaper than water."
While other liquor is taxed based on alcohol content, wine is taxed based on value, meaning cheaper wine attracts less tax. That’s hardly unique, however. Other wine exporting countries also levy less tax on domestically produced wine than liquor and beer. Compared to those countries, Australia’s excise taxes on wine are not very low.