Why is this important?
Today, alcohol has become more affordable than it has been in the past three decades. Research shows that low alcohol prices lead to risky drinking — among people who drink at high and risk levels, who drink regularly, or who are underage.’
Moreover, young people and people who use alcohol at the riskiest levels are more likely to seek cheaper alcohol than people who consume at lower risk levels.
Research shows that policies aimed at increasing the price of alcohol lead to fewer young people drinking at risky levels, a reduction in underage drinking, and a reduction in per occasion drinking. Higher prices also delay the age at which young people start to drink alcohol and the rate at which they increase the amount they drink.
Alcohol taxation is one of the most cost-effective measures to reduce alcohol harms. However, the current alcohol taxation system in Australia has been described as illogical and does not adequately recognise the extent of alcohol harm.
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 per cent) being sold for under $8.00.