Concern over ‘devastating’ alcohol tax cut possibility

The Daily Telegraph has reported a proposal to reduce the excise tax on draught beer by 50% is under ‘serious consideration’ by the Federal Government for the next budget.
 
The Brewers Association of Australia has been calling for the cut, citing reductions in trade due to the COVID-19 pandemic, while lobby groups for the spirits manufacturers have called for any tax reduction to be extended more widely.
 
While the Government has not confirmed the report, it has been greeted with concern in some quarters.
 
Led by the Foundation for Alcohol Research and Education (FARE), a number of organisations and health professionals signed an open letter this week addressed to Federal Treasurer Josh Frydenberg, arguing against any alcohol tax cuts. 
 
The signatories include Dr Hester Wilson, Chair of RACGP Specific Interests Addiction Medicine.
 
They describe their strong opposition to any move that would reduce the price of alcohol, whether through cuts to the excise tax in the next budget or as an election promise.
 
‘Any reductions to the price of alcoholic products would be absolutely devastating, at a time when we are seeing increases in the many harms from alcohol that negatively impact on far too many Australians,’ the letter states.
 
Dr Wilson, who signed in her capacity as a private GP, agreed that any reduction in alcohol price would have a negative impact from a health perspective.
 
‘I’m seeing so many people who are drinking more [since the pandemic began],’ Dr Wilson told newsGP.
 
‘It just beggars belief that they are asking for tax breaks because they are having a tough time. It’s just the most extraordinary thing.’
 
Dr Wilson said any tax reduction for alcohol would make no sense due to the social harm it can cause.
 
‘Yes, tobacco kills more people, but it doesn’t cause the community harm,’ she said.
 
‘Alcohol not only kills people and causes cancer, heart disease and liver failure, but it also causes huge harm to our communities through violence, through driving under the influence, through accidents and assaults.’
 
The open letter refers to record alcohol retailer turnover in Australia in 2021, with sales reaching $15.9 billion that year – not including sales in licenced premises.
 
‘It is well established that decreasing the price of alcohol results in increases in alcohol use and the associated health and social harms,’ the signatories wrote.
 
The letter also cites research analysing the positive effect tax policy interventions can have in cutting excessive alcohol consumption.
 
In contrast, the proposed tax break would reportedly reduce the price of a beer keg to around $35, and cut pint costs by 40c.
 
Dr Wilson echoed the concern that drinking rates could increase.
 
‘It may be that there are some producers that do struggle, but from a health point of view this is a harmful drug and needs to be strongly taxed,’ she said.
 
‘Ease of access is one of the really important drivers of use.’
 
The Australian Taxation Office (ATO) recently increased its excise rates on alcohol, which change twice a year in February and August to align with the consumer price index (CPI).
 
The Brewers Association describe Australia as having the fourth highest beer tax in the world, while statistics published by the ATO show that 2021 was the highest year for excise duty on beer for several years.
 
In 2021, ATO recorded 45,873,882 litres of alcohol subject to excise duty on beer, the highest it has been since 2013–14.
 
The potential tax cut would reportedly cost the Government $153 million.
 
The final budget before this year’s federal election will be announced on 29 March.

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