Beer and other pro-health taxes have been increased in line with Australia’s inflation-indexed tax policies. Before the August increase, the most recent tax increase took place in February 2023.
Australia increases its beer and tobacco taxes every half year because excise duties are integrated with the consumer price index. The indexing mechanism is adopted due to the fixed monetary value assigned to alcohol excise. This approach contrasts with a percentage-based tax system.
The implementation of rigorous tax policies has a significant role in mitigating the harm of alcohol in Australia. Additionally, it serves to maintain a consistent source of government revenue generated from the taxation of the alcohol industry.

The first week of August saw the reduction of affordability for beer products in Australia. This is because Australia increases its beer and tobacco taxes every six months. The government last increased beer and tobacco taxes in February 2023. These health harmful products are among those whose prices are raised on a regular basis because the excise taxes on alcohol and tobacco, among others, are indexed to the consumer price index.

When inflation goes up, the taxes on alcohol and tobacco rise, too, and with them the prices for these health harmful products.

The reason why the taxes are indexed in this manner is because the alcohol excise is set to a dollar-figure amount. Such regular increases would not take place in a percentage rate taxation system.

Taxation that controls alcohol affordability

Taxation that takes inflation into account is important to ensure that the value of the tax does not erode over time. This is because inflation forces lessens the purchasing power of the government’s tax revenue, among others. Australia’s budgetary papers for the year 2014-15 detailed the rationale for the taxation method, according to 9 News reporting.

Indexation will maintain the real value of the rate. Non-indexation has eroded the tax base; had indexation continued, the rate would now be about 55 [cents per litre (cpl)], that is, 17 cpl higher.”

Budgetary papers for the year 2014-15, Australian government

Linking taxation to the inflation rate allows the government to rely on excise taxes as a consistent source of revenue.

High alcohol tax rates also have the added benefit of helping safeguard the people from alcohol harm. Taxation is the single most impactful best buy alcohol policy solution recommended by the World Health Organisation (WHO).

Best Buy solutions to prevent alcohol harm

Taxation is a well-reviewed policy measure that is linked with reduced alcohol consumption and harm. The effectiveness of taxation is consistent across different countries, time periods, study designs and analytical approaches. It is one of the best evidenced-based policy recommendations that are not only effective, but also very cost-effective, feasible and appropriate to implement even within the constraints of national budgets. Of the five policy recommendations made by the WHO, taxation is among the three prioritized for its efficacy.

These are the alcohol policy ‘best buy‘ policy recommendations, according to WHO:

  1. High alcohol excise tax rates,
  2. Limited availability of alcohol, and
  3. Bans or comprehensive regulation of alcohol advertising, promotion, and sponsorships.

Alcohol taxation yields major benefits within and beyond the public health area. This can be illustrated with the help of the Sustainable Development Goals (SDGs).

Evidence-based alcohol taxation as recommended by the WHO helps achieve policy goals in areas such as poverty eradication, quality education, gender equality, improved social equity, economic growth and improved productivity, and several more.

Alcohol taxation has a triple-win effect:

1. Increasing domestic resource mobilization

Alcohol taxation generates government revenue for financing healthcare and other social programs.

2. Reducing the health and social burden

Alcohol taxation reduces population level alcohol use and thus reduces the overall public health, social and economic harm and costs caused by the products and practices of alcohol companies.

3. Prevention of alcohol initiation and health promotion

Alcohol taxation helps prevent alcohol initiation of children and youth, as well as helping maintain high-levels of alcohol abstention rates in low- and middle income countries.

The alcohol burden in Australia

2021 recorded the highest number of alcohol deaths in Australia in a decade. The increase in alcohol-related mortality was markedly high in males. Deaths due to illnesses caused by long-term alcohol use, such as liver cirrhosis were also particularly high.

Increase in alcohol-induced deaths in Australia
Alcohol-induced deaths rose by 5.8%, with 107 additional deaths since 2020. This was the highest rate recorded in a decade.

For example, there was a 5.8% increase in the rate of alcohol-induced deaths, with 107 additional deaths since 2020. This was the highest rate recorded in a decade.

The levels of alcohol harm are driven alcogenic environments where easy and wide availability and affordability fuel alcohol use.

This is both perpetuated and exploited by the alcohol industry to drive sales and maximize profits.

Data released by the Australian Bureau of Statistics show the real effect of alcohol consumption on the Australian people.

  • In 2021, 1,559 people died of an alcohol-induced death, comprising 1,156 men and 403 women.
  • There was a 5.8% increase in the rate of alcohol-induced deaths, with 107 additional deaths since 2020.
  • For males, the rate is the highest in the ten-year time series at 8.3 deaths per 100,000 people (8.1% increase since 2020).
  • The rate for females remained the same as in 2020.

Concerningly, these figures were about ten times the average critical care burden that was attributable to COVID-19.

And the figures do not even include deaths where alcohol was considered a contributing factor. The data only included alcohol deaths that were caused by acute illnesses such as alcohol poisoning and chronic conditions such as alcoholic liver cirrhosis.

Alcohol companies block alcohol policy improvements

Nevertheless, the Australian government is obstructed from better responding to the alcohol burden by alcohol industry lobbying and other tactics.

Movendi International has reported on the extent to which the alcohol companies lobbied and watered down the country’s national alcohol strategy not too long ago.

A scientific study revealed the manner in which the alcohol companies manipulate, misuse, and ignore scientific evidence in their lobby campaign against the national alcohol policy. The study provided insight into five of the most common tropes of alcohol industry spin, some of which attack public health oriented alcohol taxation directly.

But all these claims by alcohol companies are informed by profit maximization interests, not by independet scientific evidence. And so the benefits of alcohol taxation are clear and proven:

A recent review, for instance, examined the evidence put forth by a total of 36 studies published since January 2000. Through rigorous steps in extracting comparable data, the researchers provide a systematic quantification of those studies and estimated the impact of three major alcohol policy solutions on alcohol consumption levels.

The study shows: The greatest reduction in alcohol consumption was seen following the introduction of pricing policies, particularly for the most affordable alcohol. The researchers found that following the introduction of pricing policies, alcohol consumption reduced the most among low-income groups, while the evidence was inconclusive for other sociodemographic factors.

The implementation of comprehensive alcohol taxation policies is key in preventing alcohol harm in Australia. In addition, it also helps ensure that government revenue from taxing the alcohol industry remains consistent. However, taxation alone will not be sufficient to dismantle the normalisation of alcohol that has taken place in Australia. There is a clear need for additional alcohol policy support when it comes to protecting Australians from alcohol harm.

Recently, on August 1, 2023 the UK government brought into effect a new alcohol duty system, after a decade of cuts and freezes to the alcohol duty. In recent decades, alcohol had been getting ever cheaper, fueling a public health crisis. But the new system makes the alcohol duty across different types of alcohol more consistent by taxing based on alcoholic strength by volume (ABV). And it indexes the level of the alcohol duty to the inflation rate – an international best practice and World Health Organization recommendation.

For Further Reading

Source Website: 9 News