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Alex Wodak’s plea to the Senate on the alcopops tax

Dr Alex Wodak from St. Vincent’s Hospital Sydney writes:

Apart from the alcohol beverage industry, most people in Australia need little convincing that our favourite drug causes us a lot of trouble. Each year alcohol causes thousands of deaths, fills many hospital beds, results in many alcohol-fuelled violent rampages and cost our economy many billions of dollars.

The majority of the alcohol consumed in a community is drunk at high risk of acute harms (like wrapping a car around a lamp post) or chronic harms (such as turning canary yellow when the liver gives up). The drinks industry loves to remind us that most people drink alcohol with impunity. True. But the drinks industry would go bankrupt overnight if all the alcohol they sold was only consumed in moderation.

High risk drinking in young people is something we should be particularly concerned about. Inexperienced drinkers are usually inexperienced in other ways of the world. So high risk drinking in young people often makes an even bigger mess than it does in older people. Also, the patterns of drinking learnt in our younger days tend to persist as we get older.

This means it is always important to try and moderate drinking patters of young people so that they remain moderate as this group gets older. This was the sort of rationale behind the alcopops tax reforms. The screams from the drinks industry that raising the price of alcopops taxes would generate increased government revenue was nothing other than shameless and naked populism.

But raising alcopops taxes should be the beginning of a journey, not the end of one.

Alcohol tax reform is the single intervention which most effectively reduces alcohol problems. This is supported by mountains of evidence. Instead of taxing alcohol according to beverage type, we should be moving to taxing alcohol according to its alcohol content. Cask wine is taxed at about a quarter the rate of bottled wine.

There are no economic or public health reasons for this anomalous taxation, just political reasons. Even small increases in alcohol tax (and therefore prices) bring worthwhile benefits. Larger increases are inflationary and are not politically feasible. Faced with very high levels of alcohol problems, Britain is currently slowly increasing alcohol taxation over the next few years.

While Treasurer, Peter Costello was fond of accurately describing Australia’s alcohol taxation as a “dog’s breakfast”.  Alcohol tax reform is justified on economic grounds alone. At present, health concerns are not even considered when alcohol tax policy is decided.

Also, the Commonwealth Treasury does not discuss alcohol tax with the states and territories even though the principle of one level of government raising revenue and another level of government spending the revenue (“vertical fiscal imbalance”) is known to be inefficient.

The community is not enamoured of raising alcohol prices to fix the problems alcohol causes but does strongly support this when a smidgeon of revenue is dedicated to alcohol prevention and treatment. So add that to the cart.

About a quarter of the gap in life expectancy between Aboriginal and non-Aboriginal Australians is attributed to the ravages of alcohol. Alcohol tax reform is particularly tricky for the most disadvantaged Australians. And any alcohol tax reforms intended to reduce the gap will have to be discussed with Aboriginal Australians.

If the alcopops tax goes down in the Senate, any alcohol tax reform will be off the agenda for decades. There are other things that can and should be done to reduce the harms Australians experience from alcohol. But there is no doubt that alcohol tax reform is the Really Big One.

Let’s hope our Senators get this right.

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