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Estimated impacts of alternative Australian alcohol taxation structures on consumption, public health and government revenues

Christopher M Doran, Joshua M Byrnes, Linda J Cobiac, Brian Vandenberg and Theo Vos
Med J Aust 2013; 199 (9): 619-622. || doi: 10.5694/mja13.10605

Summary

Objective: To examine health and economic implications of modifying taxation of alcohol in Australia.

Design and setting: Economic and epidemiological modelling of four scenarios for changing the current taxation of alcohol products, including: replacing the wine equalisation tax (WET) with a volumetric tax; applying an equal tax rate to all beverages equivalent to a 10% increase in the current excise applicable to spirits and ready-to-drink products; applying an excise tax rate that increases exponentially by 3% for every 1% increase in alcohol content above 3.2%; and applying a two-tiered volumetric tax. We used annual sales data and taxation rates for 2010 as the base case.

Main outcome measures: Alcohol consumption, taxation revenue, disability-adjusted life-years (DALYs) averted and health care costs averted.

Results: In 2010, the Australian Government collected close to $8.6 billion from alcohol taxation. All four of the proposed variations to current rates of alcohol excise were shown to save money and more effectively reduce alcohol-related harm compared with the 2010 base case. Abolishing the WET and replacing it with a volumetric tax on wine would increase taxation revenue by $1.3 billion per year, reduce alcohol consumption by 1.3%, save $820 million in health care costs and avert 59 000 DALYs. The alternative scenarios would lead to even higher taxation receipts and greater reductions in alcohol use and harm.

Conclusions: Our research findings suggest that any of the proposed variations to current rates of alcohol excise would be a cost-effective health care intervention; they thus reinforce the evidence that taxation is a cost-effective strategy. Of all the scenarios, perhaps the most politically feasible policy option at this point in time is to abolish the WET and replace it with a volumetric tax on wine. This analysis supports the recommendation of the National Preventative Health Taskforce and the Henry Review towards taxing alcohol according to alcohol content.

  • Christopher M Doran1,2
  • Joshua M Byrnes3
  • Linda J Cobiac4
  • Brian Vandenberg5
  • Theo Vos4,6

  • 1 Hunter Medical Research Institute, Newcastle, NSW.
  • 2 ECU Health and Wellness Institute, Edith Cowan University, Perth, WA.
  • 3 Centre for Applied Health Economics, Griffith University, Brisbane, QLD.
  • 4 School of Population Health, University of Queensland, Brisbane, QLD.
  • 5 Cancer Council Victoria, Melbourne, VIC.
  • 6 Institute of Health Metrics and Evaluation, University of Washington, Seattle, Wash, USA.


Acknowledgements: 

We acknowledge the funding provided for our research by the Victorian Health Promotion Foundation (VicHealth).

Competing interests:

No relevant disclosures.

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