Alcohol taxation policy in Australia: public health imperatives for action

To the Editor: Skov puts the case for an alcohol taxation policy in Australia.1 Few people, if any, in public health would disagree that alcohol is a serious public health issue in Australia, and few would doubt that higher prices will reduce consumption. But why tax the consumers directly? Why not tax the providers?

I propose a tax on the advertising budget of alcoholic beverage producers. Further, this tax should be weighted according to the alcoholic content of the products they sell. Yes, this would mean higher prices for drinkers, but set in this way the incentive mechanism is to get sales and consumption down, firstly by reducing advertising, and secondly by lowering the amount of alcohol in what is sold.

It has been estimated that more than a quarter of a billion dollars are spent each year on advertising alcoholic beverages in Australia.2 An average 200% tax, graded by alcoholic content of products, would mean a lot of money for the government! It might well make up for the estimated loss from the defeated “alcopops” tax of $1.6 billion over 4 years.3 Indeed, we should hope that it would not bring in half a billion dollars a year, as both advertising budgets and average alcohol content fall.

An advertising tax would almost certainly make much greater inroads into reducing alcohol consumption than would the alcopops tax. It would raise the price for consumers, but to a lesser extent for lower alcohol-content beverages. It would severely discourage advertising, especially of high alcohol-content drinks, and would encourage manufacturers to produce beverages that are lower in alcohol.

Any increase in cost to the consumer through taxation risks being regressive and might make the poor even poorer if they continue to drink, with a consequent impact on their health. This needs to be watched. But using the revenues raised to devise a targeted counselling program for those who do want to reduce their consumption (and for those who perhaps cannot do so without help) cannot be beyond the wit of Treasury and the health department.