Communities in Australia are calling on the government to protect alcohol taxes in the interest of public health and not to bow down to alcohol industry pressure.
Multinational alcohol giants interfere in Australian alcohol policy
The alcohol industry in Australia has deployed an organized lobby campaign to cut alcohol taxes in the country. As Movendi International previously reported, Big Alcohol is claiming that it can’t stay profitable using the pandemic as an excuse. However, contrary to industry claims, in 2020, the alcohol industry made $15.6 billion in retail sales, which is a 26.7% increase from 2019.
The alcohol industry lobby groups fronted by The Australian Hotels Association (AHA), Clubs Australia (CA), and the Brewers Association (BA) are pushing for a 50% reduction in draught beer taxes. The industry is using one of its long-term arguments of supporting small businesses by cutting taxes. However, they are conveniently omitting the heavy health, social and economic burden of alcohol on the Australian people.
Big Alcohol behind the lobby frenzy
- Kirin, Japanese beer giant owning Lion Brewery,
- Asahi Breweries, Japanese alcohol conglomerate, owning Carlton & United Breweries,
- Both Lion and C&B Breweries are members of the BA.
- Diageo, British liquor giant, and
- Coca-Cola Amatill,
- Both are members of AHA, where also Asahi is member.
The alcohol industry has strategically deployed their tax cut lobbying campaign in an election year in Australia to put maximum pressure on politicians.
Alcohol lobbyists have been pushing to cut alcohol taxes for decades,” said Ms. Caterina Giorgi, CEO of the Foundation for Alcohol Research and Education (FARE), as per their website.
Now they are using the cover of the pandemic to push their agenda.”
Ms. Caterina Giorgi, CEO, Foundation for Alcohol Research and Education (FARE)
Members of Parliament campaign for beer tax cut as Big Alcohol lobby targets marginal seats
Dana Daniel and the Sydney Morning Herald revealed that Treasurer Josh Frydenberg has met with Big Alcohol lobbyists behind the campaign to halve the tax on draught beer in the federal budget after hoteliers and alcohol manufacturers ploughed almost $390,000 into the government’s election campaign coffers.
Australian Hotels Association (AHA) chief executive Stephen Ferguson said he had met with Mr Frydenberg to discuss the push for $150 million of tax relief on beers poured in pubs.
Big Alcohol lobby groups have been touring Australia targeting Coalition MPs in marginal seats, with Robertson MP Lucy Wicks, on the NSW Central Coast, the latest to throw her support behind the campaign after a recent meeting.
An analysis of political donation returns lodged with the Australian Electoral Commission by The Sydney Morning Herald and The Age shows that multinational beer giant Lion and the AHA between them donated $389,773 to the Coalition and $290,608 to Labor in 2020-21.
The Big Alcohol campaign seeks to tie the beer excise to cost-of-living pressures on Australians. The alcohol industry demands a boost to hospitality venues struggling in the coronavirus pandemic. But communities and public health advocates have expressed worries that cheaper alcohol will further drive up rates of alcohol-related harm.
Massive costs from harm caused by the products and practices of Big Alcohol
According to the industry itself, 50% tax cut on draught beer as lobbied by the alcohol industry would cut Federal alcohol tax revenue by $150m a year.
As it is, the alcohol tax revenue in Australia falls way short of the costs that alcohol harm causes to Australian communities and society. Further cutting taxes would increase consumption and harm costing Australian citizens and the government even more.
The products and practices of the alcohol industry are draining much-needed resources to fight the ongoing pandemic in Australia. A new study by the National Drug Research Institute (NDRI) at Curtin University in Perth reveals the massive costs of $66.8 billion due to alcohol.
The study conservatively estimated the cost of harm caused by the products and practices of the alcohol industry to the Australian people to be $66.8 billion. This is far higher than the estimated cost in 2010 which was $14.4 billion.
Behind these figures are real-life stories of Australians harmed by the products and practices of the alcohol industry.
Communities stand up for health and safety
More than 80 community leaders and organizations in Australia have signed an open letter to Treasurer, the Hon Josh Frydenberg MP, to halt any plans for an alcohol tax cut. The letter asks the Treasurer to abandon cutting alcohol taxes because of the risk to the health, well-being, and safety of Australians.
The organizations that signed the letter include among others the Cancer Council Australia, the National Aboriginal Community Controlled Health Organisation (NACCHO), the Aboriginal Drug & Alcohol Council (ADAC), the Australasian College for Emergency Medicine (ACEM), and FARE. Community leaders such as Former Australian of the Year Fiona Stanley and Local Hero of the Year Shanna Whan have also signed the letter.
The letter says that any reductions to the price of alcoholic products would be devastating, particularly at a time when communities are seeing increases in harm caused by the products and practices of the alcohol industry.
At a time when alcohol harms and demand for health and community services are rising, it makes no sense to cut alcohol taxes, which will increase alcohol harm,” said Ms. Caterina Giorgi, CEO of the Foundation for Alcohol Research and Education (FARE), as per their website.
Ms. Caterina Giorgi, CEO, Foundation for Alcohol Research and Education (FARE)
As Movendi International has previously reported:
- There was an 8.3% increase in Australian deaths caused by alcohol in 2020 compared to 2019.
- For the first time in four years, the number of Australians who use alcohol has increased in 2020.
- Alcohol-related ambulance callouts have also increased by 8% in 2021 compared to 2020, as per St Johns WA.
- This translates to 16 ambulance call-outs for alcohol intoxication per day.
According to Aboriginal Drug and Alcohol Council CEO, Adjunct Associate Professor Scott Wilson, the government will be sending the wrong message by cutting alcohol taxes at a time when many alcohol and other drug services are seeing an influx of people seeking help.
We’re already seeing a flood of people trying to access services because of alcohol, and I shudder to think of the impact on the community if the price of alcohol is cut,” said Adjunct Associate Professor Scott Wilson, CEO of Aboriginal Drug and Alcohol Council, as per FARE.
Adjunct Associate Professor Scott Wilson, CEO, Aboriginal Drug and Alcohol Council
Dr. Claire Skinner, President of the Australasian College for Emergency Medicine said cutting alcohol taxes will further increase the heavy alcohol burden on emergency departments.
Emergency Departments are already under immense pressure. Alcohol and other drug harm is one of the largest, preventable public health issues facing emergency departments. Cutting alcohol taxes could drive more harm and further increase avoidable presentations to EDs,” said Dr. Claire Skinner, President of the Australasian College for Emergency Medicine, as per FARE.
Dr. Claire Skinner, President of the Australasian College for Emergency Medicine
Public health taxes: Why they matter
The Public Health Association of Australia (PHAA) recently published its submission to the discussion about the 2022-23 Federal Budget. “The Public Health Crisis Budget” makes several recommendations for a national budget ready to respond to the national health crisis.
One of their recommendations is to embrace levies relating to alcohol, tobacco, and sugar-sweetened beverages, which would simultaneously achieve public health goals while generating revenue to offset other public health investments.
The PHAA analysis shows the potential of pro-health taxes.
Health taxes, such as alcohol taxation, can:
- Raise awareness about unhealthy products,
- Reduce the consumption of unhealthy products,
- Reduce the associated negative health burdens, and
- Create new revenue streams for public health investment.
There are many policy merits of health taxes.
- Health taxes are a high-return investment that saves lives and prevents disease,
Health taxes
- advance health equity,
- avert healthcare expenditure,
- increase workforce participation, and
- boost revenue for the general budget.
Australia’s current approach to alcohol taxation is flawed, and does not adequately recognize the extent of harms that result from alcohol consumption.”
Public Health Association of Australia’s (PHAA), submission 2022-23 Federal Budget “The Public Health Crisis Budget“
In recent years, alcohol has become more affordable in Australia. However, evidence shows that the lower the price of alcohol products, the higher the consumption resulting in a growing alcohol burden on people and communities.
An increase in the excise tax on alcohol products is proven to reduce alcohol use and resulting harm and is a recommended best-buy policy measure of the World Health Organization.
The volumetric alcohol tax equalization proposal in the PHAA pre-budget submission is estimated to raise over $12 billion over 4 years.
Volumetric alcohol tax equalization means that the higher the alcohol content, regardless of beverage type, the higher the tax.
Cutting alcohol taxes in the current pandemic environment in Australia will only make matters worse and further accelerate the already rising alcohol harms in Australian communities. A tax increase on the other hand has the potential to prevent and reduce the harm caused by the products and practices of the alcohol industry while raising revenue for the government at the same time. This tax revenue can be used to fund public health programs to prevent alcohol problems and support treatment and recovery services for people with alcohol use disorder or alcohol addiction.
As Movendi International has illustrated, alcohol taxation is a triple-win measure for global health and sustainable development. Implementing public health-oriented, evidence-based alcohol taxation measures reaps a triple positive effect:
- Domestic resource mobilization
- Generate government revenue for financing development and health promotion
- Easing the public health and sustainable development burden
- Reduce alcohol-related harms and alcohol’s overall public health, the social and economic burden
- Prevention of initiation of alcohol use
- Maintain high levels of alcohol abstention rates in low- and middle-income countries
What does FARE want? Reform of the alcohol taxation system
The most illogical part of the alcohol taxation system is the Wine Equalisation Tax (WET). Under the WET, wine and other fruit-based alcohol products are taxed based on their wholesale price, rather than alcohol content. This encourages the production of cheap wine and has led to a flood of cheap alcohol, such as cask wine and cleanskins (brand-free wines).
All other alcohol products like beer and spirits are taxed on a volumetric basis, albeit at different rates, with the amount of tax paid determined by the volume of alcohol within the product, hence the term ‘volumetric tax’, and the type of alcohol (e.g., beer or spirits).
The WET has contributed to wine being the cheapest form of alcohol available for sale, with some wine in Australia being sold for as little as 24 cents per standard drink and the majority of bottled wine (65 percent) being sold for under $8.00.
FARE is calling for reform of the alcohol taxation system in Australia to create a more equitable system that discourages high-risk alcohol use, addresses the costs of alcohol harm, and most importantly supports public health and wellbeing.
The main aim of alcohol tax reform is to raise the price of low-quality, high-strength wine to make it less affordable, and therefore reduce the amount that people consume. The best way to do this would be to tax wine based on its alcohol content – the same way as beer and spirits; the stronger the alcohol, the more tax paid.
This would ensure that the tax paid on alcohol is proportionate to the harm it causes. At present the wine tax inverts the relationship between tax paid and harm caused; the wine that causes the most harm is taxed the least.
FARE is not alone in calling for this reform. At least 13 government reviews have recommended a volumetric tax for wine.
The Australian Government can no longer delay reform and ignore the negative impacts the current alcohol tax system is having on the community.
Sources
The Shout: “Pubs, Clubs and brewers unite in call for beer tax relief“
Intouch Public Health: “Public health measures can help balance the Budget“
The Sydney Morning Herald: “MPs campaign for beer tax cut as booze lobby targets marginal seats“
FARE: Pricing and taxation