The excise tax rate on alcohol is adjusted to inflation annually in New Zealand. With inflation rising this means alcohol taxes will also rise.
But Big Alcohol is dependent on cheap alcohol to maximize profits in NZ. Therefore, the alcohol industry is lobbying against the tax increase and is instead pushing for a tax reduction or a halt on the alcohol taxes.

In New Zealand excise taxes on alcohol are adjusted annually for inflation to ensure alcohol does not become more affordable. Nevertheless, alcohol largely remains cheap and easily affordable in the country. But since inflation is rising now, alcohol excise taxes are set to rise as well.

This troubles the alcohol industry. They love cheap booze to drive consumption and profits. They do not love when the government tackles alcohol taxation from a public health approach.

So, Big Alcohol is lobbying for reductions or a halt of alcohol taxes claiming a tax hike would be “crippling” for the alcohol importers and manufacturers. Alcohol industry lobby group the Alcohol Beverages Council is using the pandemic excuse claiming that it has made it difficult for the industry. The Alcohol Beverages Council is a front group for political interference by some of the largest global alcohol producers, such as Asahi, Pernod Ricard, and Lion Breweries.

As usual, the industry is citing rising costs of production and the pandemic as reasons to request a tax reduction or a halting of taxes.

The alcohol industry has been using the pandemic excuse to push for tax cuts in nearby Australia as well. However, as Roy Morgan’s data pointed out in Australia the alcohol industry had no problem staying profitable during the pandemic.

Big Alcohol uses CSR programs to try to influence alcohol policy

Big Alcohol through its lobby group Alcohol Beverages Council goes so far as to cite their corporate social responsibility (CSR) projects to ask for a reduction in taxes.

The alcohol industry in New Zealand pays the health promotion levy apart from taxes. The industry is also investing money in CSR-type education programs and support initiatives.

While the industry claims these CSR activities are to reduce alcohol harm, independent research has found otherwise.

A study published in BMC Public Health revealed three CSR tactics employed by the alcohol companies which are closely tied in with the industry’s underlying corporate intents.

  1. The alcohol manufacturers employ CSR as a means to frame issues, define problems and guide policy debates. In doing this, the alcohol companies are able to deflect and shift the blame from those who manufacture and promote alcoholic products to those who consume them.
  2. The alcohol corporations promote CSR initiatives on voluntary regulation in order to delay and offset alcohol control legislation.
  3. The alcohol corporations undertake philanthropic sponsorships as a means of indirect brand marketing as well as gaining preferential access to emerging alcohol markets.

The group cites the levy and their CSR initiatives to claim “The alcohol industry already makes large social contributions outside the excise tax”. However, the excise taxes and even the health promotion levy are not enough to cover the cost of alcohol harm to New Zealand citizens.

In 2018 Berl economist Ganesh Nana estimated that alcohol harm costs New Zealand about $7.85 billion a year. This includes unemployment, the labor market, health costs, court costs, and road crashes.

However, this is likely to be an underestimation since certain alcohol harms such as the psychological impact and harm to others are harder to quantify.

$7.85 billion
The cost of harm caused by the alcohol industry in New Zealand
In 2018 Berl economist Ganesh Nana estimated that alcohol harm costs New Zealand about $7.85 billion a year.

The cheap alcohol problem in New Zealand

Cheap alcohol is a serious problem in New Zealand despite the inflation-adjusted alcohol excise taxes. As Movendi International reported in 2021, Alcohol Healthwatch conducted an exploratory study to find out about the prices of alcohol in off-license outlets across Tāmaki Makaurau Auckland.

They found that alcohol has gotten ultra cheap over the years in New Zealand.

A person could purchase so much alcohol to engage in binge alcohol use for as little as the price of a coffee.

Prices were determined per standard unit of alcohol (10g of pure alcohol). The study found:

  • Cask wine was the cheapest alcohol product per standard unit (77c), followed by bottled red and white wine (86c);
  • Beer and light spirits were sold for less than $1.00 per standard unit;
  • The cheapest spirits and Ready to Drink products (RTDs) were sold for less than $1.20 per standard unit;
  • Many of New Zealand’s most popular brands of beer, wine, RTDs and spirits were sold at $1.30 or less per standard unit; and
  • Supermarkets were found to offer the lowest-price alcohol products, often at considerably lower prices than the alcohol prices found in bottle stores. Multi-buy promotions offered the lowest of all prices per standard unit for wine (81c) and beer (85c).

In the report Alcohol Healthwatch recommended the following solutions to New Zealand’s cheap alcohol problem: 

  • Increase the alcohol excise tax rates by at least 50% (equating to an overall 10% increase in alcohol prices); and 
  • Set a floor price or minimum unit price per standard alcohol unit.

Clearly, alcohol excise taxes should be increased significantly to reduce the heavy burden alcohol products cause to society.

Recently alcohol policy momentum has been picking up in New Zealand championed by MP Chlöe Swarbrick’s  Private Members’ Bill “The Sale and Supply of Alcohol (Harm Minimisation) Amendment Bill”. The largest local councils in New Zealand Auckland City Council and Christchurch City Council have supported the Bill.

Source Website: RNZ