tag:theconversation.com,2011:/id/topics/alcohol-tax-1476/articlesAlcohol tax – The Conversation2023-07-06T14:50:22Ztag:theconversation.com,2011:article/2091672023-07-06T14:50:22Z2023-07-06T14:50:22ZHow ‘drinkflation’ affects the price of your pint<figure><img src="https://images.theconversation.com/files/535837/original/file-20230705-17-xm2j7m.jpg?ixlib=rb-1.1.0&rect=41%2C16%2C5461%2C3646&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Is 'drinkflation' a thing?</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/clueless-red-haired-young-man-curly-618370700">Cast Of Thousands/Shutterstock</a></span></figcaption></figure><p>The cost of living crisis has seen the prices of many goods and services rise sharply in the past 18 months, but food and drink prices have been particularly hard hit. </p>
<p>Some food producers have responded by reducing the size of their products, while keeping prices the same – a phenomenon known as “<a href="https://theconversation.com/three-ways-companies-change-their-products-to-hide-inflation-189924">shrinkflation</a>”. </p>
<p>When several major brewers were reported to have reduced the strength of beers recently, including Fosters lager (cut from 4% alcohol by volume (ABV) to to 3.7%) and ales such as Old Speckled Hen and Spitfire, it led to <a href="https://www.dailymail.co.uk/news/article-12206607/After-shrinkflation-drinkflation-Brewers-pocket-millions-cutting-alcohol-beers.html">accusations of “drinkflation”</a> and short-changing of customers. </p>
<p>Duty on beer is levied on the basis of alcohol content, so a 0.3% reduction in ABV equates to a saving of around 4p on a pint. Brewers can pocket this if they keep the sales price the same. If this seems like small beer, consider the fact that we drink around <a href="https://www.gov.uk/government/statistics/alcohol-bulletin">7.8 billion pints</a> each year in the UK, meaning that a 0.3% cut across all beers would see industry revenue rise by £290 million a year. </p>
<p>Brewers and the British Beer and Pub Association have pointed to <a href="https://www.thedrinksbusiness.com/2023/06/from-shrinkflation-to-drinkflation-alcohol-reduced-to-ensure-prices-remain-static/">rising production costs</a> and squeezed profit margins as the justification for these reductions in strength. But concerns remain that the great British pint is becoming another casualty of the cost of living crisis.</p>
<p>But this is not a new phenomenon. Brewers have been cutting the strength of major beer brands for <a href="https://www.bmj.com/content/350/bmj.h1301">well over a decade</a>. In many cases this is done with minimal publicity and without many consumers even noticing. </p>
<p>HMRC <a href="https://www.gov.uk/government/publications/rates-and-allowance-excise-duty-alcohol-duty/alcohol-duty-rates-from-24-march-2014">collects alcohol taxes</a> on behalf of the UK Treasury and requires all alcoholic products above 1.2% to advertise their alcoholic strength on the label. But beer producers are allowed a little <a href="https://www.legislation.gov.uk/uksi/1996/1499/schedule/5/made">wiggle room</a> around this, provided the value on the label is within 0.5% of the true strength. </p>
<p>This is a concession to small producers who may find it hard to produce every batch to exactly the same ABV but don’t want to have to produce new labels with each small variation. </p>
<p>Molson Coors took advantage of this leeway in 2012 to <a href="https://www.bbc.co.uk/news/uk-41059610">reduce the strength of Carling</a> from 4% to 3.7%, but continued to label and market it as 4%. This only came to light when <a href="https://www.independent.co.uk/news/uk/home-news/carling-alcohol-volume-lower-than-advertised-tribunal-tax-hmrc-a7914731.html">HMRC took the company to court</a> for paying duty at the lower rate. Ultimately Carling won the court case, but this calls the strength of the contents of your can or pint glass into question. </p>
<h2>Changing tastes</h2>
<p>It is also important to point out that long-term trends in alcohol consumption have not favoured beer producers and so they may be looking for ways to recover lost revenues. In 1970, UK adults drank an average of 181 pints of beer per year. By 2021 that had fallen to 120. Over the same period, average wine consumption increased from 5 to 28 bottles per year. </p>
<p>These changes in drinking patterns have run alongside a gradual shift away from drinking in the pub to drinking at home. A couple of decades ago we drank two-thirds of our beer in pubs and bars, according to data from the British Beer and Pub Association – today it’s less then one-third. </p>
<p>COVID lockdowns and the closure of pubs for much of the pandemic has only served to accelerate these trends, as has an <a href="https://www.publichealthscotland.scot/publications/mesas-monitoring-report-2022/">ever-widening gap</a> in the price of drinks in the pub compared to the supermarket. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/535885/original/file-20230705-19-u5hhho.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Line chart showing line for total pints of beer sold at pubs and line for total drunk at home converging over time." src="https://images.theconversation.com/files/535885/original/file-20230705-19-u5hhho.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/535885/original/file-20230705-19-u5hhho.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=413&fit=crop&dpr=1 600w, https://images.theconversation.com/files/535885/original/file-20230705-19-u5hhho.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=413&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/535885/original/file-20230705-19-u5hhho.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=413&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/535885/original/file-20230705-19-u5hhho.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=518&fit=crop&dpr=1 754w, https://images.theconversation.com/files/535885/original/file-20230705-19-u5hhho.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=518&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/535885/original/file-20230705-19-u5hhho.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=518&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><a class="source" href="https://beerandpub.com/data-statistics/">Data from the British Beer and Pub Association, analysis by Colin Angus</a>, <span class="license">Author provided</span></span>
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<p>There has also been a massive shift in the age profile of drinkers. Alongside <a href="https://theconversation.com/why-are-young-people-drinking-less-than-their-parents-generation-did-172225">big falls in alcohol consumption</a> among young people, who historically go to the pub far more, there have been <a href="https://www.ias.org.uk/2019/01/25/a-generation-of-hidden-drinkers-whats-happening-to-the-drinking-of-the-over-50s/">corresponding increases in drinking</a> by older age groups, who tend to favour drinking at home.</p>
<p>So the cost of living crisis has arrived at a tough time for the brewing industry. Yet, in spite of these challenging headwinds, the price of alcohol has risen much more slowly than other goods. </p>
<p>With overall inflation sitting at 20.5% since January 2021 and the price of common goods such as milk, cheese and eggs having risen by over 50%, the prices of beer, wine and spirits have risen by 13.1%, 7.2% and 8% respectively. This is less than <a href="https://www.ons.gov.uk/economy/inflationandpriceindices/datasets/consumerpriceindices">any other food and drink category</a>. And so, although average disposable income has fallen, alcohol is more affordable than at almost any point in the last 30 years.</p>
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<a href="https://images.theconversation.com/files/535888/original/file-20230705-17-sqixl8.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Line chart showing affordability of all alcohol, beer, wine and spirits increasing between 1990 and 2020." src="https://images.theconversation.com/files/535888/original/file-20230705-17-sqixl8.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/535888/original/file-20230705-17-sqixl8.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/535888/original/file-20230705-17-sqixl8.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/535888/original/file-20230705-17-sqixl8.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/535888/original/file-20230705-17-sqixl8.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/535888/original/file-20230705-17-sqixl8.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/535888/original/file-20230705-17-sqixl8.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><a class="source" href="https://www.ons.gov.uk/economy/inflationandpriceindices">Data from ONS, analysis by Colin Angus</a>, <span class="license">Author provided</span></span>
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<p>All of this means that it’s little surprise to see brewers looking for ways to increase their profits. Making small reductions in alcoholic strength is one way they can do this. </p>
<p>But are consumers being cheated? People’s perspective on this will depend on their motivations for drinking beer. With shrinkflation, consumers are paying the same amount for a chocolate bar or a bag of crisps, but getting less. With “drinkflation” consumers are still getting the same amount of beer, it just contains slightly less alcohol. </p>
<p>So, only people who are drinking for the specific purpose of getting drunk are being “short-changed”. For people who are drinking beer because they like the taste, or who see beer as an important part of a social ritual, the lower alcohol content is more likely to be a positive, given that <a href="https://link.springer.com/article/10.1186/s40814-021-00777-4">people consume less alcohol</a> when drinking lower strength beer and the health benefits of reduced alcohol intake.</p>
<p>In line with this, <a href="https://www.ft.com/content/e7ff0844-06f3-4b6a-89d8-ea2f2a329cff">the low alcohol and alcohol-free beer industry</a> is growing. Most shops and many bars now offer at least one alcohol-free beer option. The UK market has also seen the launch of several lower-strength, carb and calorie versions of existing brands, such as <a href="https://www.beveragedaily.com/Article/2023/04/05/A-new-star-is-born-Heineken-Silver-brings-light-lager-shaped-for-a-new-generation-of-US-consumers">Heineken Silver</a>.</p>
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<img alt="Multiple hands raised with glasses." src="https://images.theconversation.com/files/535865/original/file-20230705-27-4ubafv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/535865/original/file-20230705-27-4ubafv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=381&fit=crop&dpr=1 600w, https://images.theconversation.com/files/535865/original/file-20230705-27-4ubafv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=381&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/535865/original/file-20230705-27-4ubafv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=381&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/535865/original/file-20230705-27-4ubafv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=478&fit=crop&dpr=1 754w, https://images.theconversation.com/files/535865/original/file-20230705-27-4ubafv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=478&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/535865/original/file-20230705-27-4ubafv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=478&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/group-happy-friends-drinking-toasting-beer-1085215253">View Apart/Shutterstock</a></span>
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<p>This puts us in an unusual situation. Reducing the alcoholic strength of beers is in the commercial interests of brewers, but it also aligns with trends in consumer demand and is likely to be a benefit to public health by reducing overall alcohol consumption. </p>
<p>It’s incredibly rare for these, usually competing, interests to be pulling in the same direction, so perhaps the current trend is something worth celebrating for almost everybody. Cheers to that.</p><img src="https://counter.theconversation.com/content/209167/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Colin Angus receives funding from the National Institute for Health and Care Research, World Health Organization, Scottish Government, Institute for Public Health, NHS England & NHS Improvement and Cancer Research UK. </span></em></p>The cost of living crisis may have affected pricing for beer brands, helping brewers save money but it could also be good for people’s health.Colin Angus, Senior Research Fellow in the Sheffield Alcohol Research Group, University of SheffieldLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2077282023-06-20T05:49:34Z2023-06-20T05:49:34ZWhy are we paying so much for alcohol-free drinks that aren’t taxed?<figure><img src="https://images.theconversation.com/files/532831/original/file-20230620-27-fy6fr8.jpg?ixlib=rb-1.1.0&rect=67%2C0%2C5579%2C3181&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Dry July, an <a href="https://www.dryjuly.com/">Australian fundraising campaign</a> to support people affected by cancer, is almost here again. The premise is that abstaining from booze and hangovers for a month frees up money to donate.</p>
<p>But with prices in the <a href="https://intheblack.cpaaustralia.com.au/innovation/why-non-alcoholic-beverages-industry-booming">booming alcohol-free drinks category</a> often <a href="https://www.news.com.au/lifestyle/food/drink/why-do-nonalcoholic-drinks-cost-so-much-in-australia/news-story/303a63e02fdaad4b623e7faf11ee8f09">rivalling those of regular tipples</a>, participants this year might find they have less spare cash than they anticipate.</p>
<p>Traditional alcohol producers, who have expanded into the <a href="https://www.theiwsr.com/no-and-low-alcohol-category-value-surpasses-11bn-in-2022/">US$11 billion</a> non-alcoholic drinks industry, have helped make the high prices charged seem acceptable to consumers by using a marketing tactic called price-anchoring.</p>
<h2>Lured into paying more</h2>
<p>When we encounter a new product, we latch onto whatever seems relevant in the immediate environment to estimate its value. Sellers often exploit this by staging information at purchase points. The classic is a price tag with $99 struck out and $79 written in. Whether it’s accurate or not, the $99 reference point shapes our perception of value and price.</p>
<p>This so-called “<a href="https://www.talon.one/glossary/price-anchoring">price anchoring</a>”, is just one example of the broader <a href="https://www.science.org/doi/10.1126/science.185.4157.1124">anchoring cognitive bias</a> described by psychologists Amos Tversky and Daniel Kahneman.</p>
<p>The essence of anchoring is that we tend to rely too heavily on an initial piece of information (the “anchor”) when making decisions. This can lead to skewed judgements and <a href="https://helpfulprofessor.com/anchoring-bias-examples/">poor decisions</a> in everything from deciding whether to have surgery to buying real estate.</p>
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Read more:
<a href="https://theconversation.com/australias-system-of-taxing-alcohol-is-incoherent-but-our-research-suggests-a-single-tax-rate-isnt-the-answer-195907">Australia's system of taxing alcohol is 'incoherent', but our research suggests a single tax rate isn't the answer</a>
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<p>Anchoring has been used to reinvent and elevate the virgin drinks category by exploiting the fact we are used to paying high prices for alcohol in bottles, cans or glasses of a certain size, shape and sophistication. When alcohol-free versions with similar labels appear beside them on the shelf, website or menu, we tacitly accept they should command roughly the same prices.</p>
<p>It’s not just that the next bottle along provides a suggestive price. Our brains, steeped in marketing, know that alcohol prices can range far upwards from “normal”, making them not just comparison points but the proverbial $99 scratched out. So even if we spend a lot on non-alcoholic wine, we feel like we have scored compared with what we might have dropped on a bottle of Grange.</p>
<h2>Where we are most susceptible</h2>
<p>The effect is strongest in bottle shops and bars, where the glitz of alcohol marketing, social pressure and the sheer number of expensive items overwhelms our rational thinking. But it also works on websites of the national liquor outlets where special zero-alcohol categories have been established beside the traditional beer, wine and spirits listings.</p>
<p>It doesn’t take much browsing to confirm that prices are similar. Currently, on one of the big retailers’ websites, a case of 330ml bottles of Heineken Lager (5% alcohol) is $55, Heineken 3 (3.3% alcohol) is $50, and Heineken Zero (less than 0.5% alcohol) is $49. Among the non-alcoholic spirits, 700ml of Lyre’s Dry London Spirit - “<a href="https://lyres.com.au/range/dry-london-spirit/">crafted to capture the essence of a classic gin</a>” - is $51 at another outlet while the same size bottle of 37% alcohol Gordon’s London Dry Gin is $45. Gordon’s own non-alcoholic offering - Gordon’s 0.0 Alcohol Free - is listed at $38.</p>
<p>Price anchoring in the alcohol-free market comes with an extra twist of lemon.</p>
<p>Brands will encourage you to think their investment in developing “healthier options” using “high-quality ingredients” means <a href="https://www.craftzero.com.au/blogs/craftzero-life/why-non-alcoholic-drinks-arent-cheap">high prices are fair enough</a>, and that a non-alcoholic drink made with arcane “botanicals” and “<a href="https://www.entrepreneur.com/living/adaptogens-in-non-alcoholic-beverages-are-on-the-rise-and/450472">adaptogens</a>” in a nice bottle is worth a splurge.</p>
<figure class="align-center ">
<img alt="Woman selecting wine in supermarket" src="https://images.theconversation.com/files/532827/original/file-20230620-21-ajfknu.jpg?ixlib=rb-1.1.0&rect=548%2C131%2C4914%2C3366&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/532827/original/file-20230620-21-ajfknu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/532827/original/file-20230620-21-ajfknu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/532827/original/file-20230620-21-ajfknu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/532827/original/file-20230620-21-ajfknu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/532827/original/file-20230620-21-ajfknu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/532827/original/file-20230620-21-ajfknu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">We get caught thinking it’s worth paying extra for non-alcoholic versions of well known brands.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/woman-examines-bottle-wine-supermarket-shopping-2105786561">www.shutterstock.com</a></span>
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<p>But look at what makes up the price. All processed drinks incur a Goods and Services Tax (GST). And drinks that contain alcohol are hit with a heavy additional excise. The <a href="https://www.ato.gov.au/business/excise-on-alcohol/excise-duty-rates-for-alcohol/">exact percentage</a> is <a href="https://theconversation.com/australias-system-of-taxing-alcohol-is-incoherent-but-our-research-suggests-a-single-tax-rate-isnt-the-answer-195907">difficult to calculate</a>, but the alcohol-related tax on a bottle of full-strength beer can exceed 30%.</p>
<p>Industry players don’t pay that tax on non-alcoholic drinks. So, in a sense, they are pocketing a hefty bonus that well-anchored customers forget is not being passed on to the government. Ouch.</p>
<h2>Supermarkets and nurturing the next generation</h2>
<p>Seemingly at odds with price anchoring is the appearance of non-alcoholic versions of some famous brands in supermarkets.</p>
<p>An incentive for names like Heineken, Coopers and Gordon’s to be in supermarkets is visibility in a family-friendly environment. Their brand becomes recognisable to customers who are underage now, but will soon be ready to buy alcohol for their 18th birthday bash.</p>
<p>It’s a risky strategy, however, and can attract <a href="https://www.menzies.edu.au/icms_docs/327145_Zero-alcohol_beverages_%E2%80%93_harm-minimisation_tool_or_gateway_drink.pdf">adverse publicity</a>. In fact, to protect their reputations, several supermarket chains in New Zealand <a href="https://www.1news.co.nz/2022/11/08/why-are-supermarkets-checking-id-for-zero-per-cent-alcohol-sales/">require customers to show ID</a> when purchasing non-alcoholic lookalike drinks.</p>
<h2>Is there a way to overcome the illusion?</h2>
<p>The Australian government’s Behavioural Economics Team (BETA) has an informative <a href="https://behaviouraleconomics.pmc.gov.au/blog/anchors-away-prices-anchors-and-auctions">blog post on minimising the impact of price anchors</a>. But research suggests even <a href="https://onlinelibrary.wiley.com/doi/10.1111/j.1755-053X.2008.00018.x">experts are susceptible</a>.</p>
<p>Besides awareness, you can <a href="https://hbr.org/2015/05/outsmart-your-own-biases">reduce the effect</a> by curating your exposure to price information. If you need non-alcoholic drinks for home or an event, visit the supermarket before the bottle shop. The range may not be as big, the drinks may not be any cheaper, and you may need to go to the bottle shop anyway. But the experience will put the untaxed non-alcoholic products in a fairer context – the soft drink aisle. Comparing prices under those sober lights, you might suddenly feel like picking up a bottle of ginger ale instead.</p>
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Read more:
<a href="https://theconversation.com/were-getting-really-good-at-making-alcohol-free-beer-and-wine-heres-how-its-done-193318">We’re getting really good at making alcohol-free beer and wine. Here’s how it’s done</a>
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<p>In bars and clubs, you can try to flip the script. Ask for your soda water in a fancy glass with lots of ice and slices of lemon or lime. This anchors what’s in your hand to high-priced cocktails.</p>
<p>Of course, if you embrace the life of a true ascetic, H₂O is a <a href="https://earth911.com/business-policy/country-regulations-free-drinking-water/">zero-dollar option</a> that, <a href="https://www.goodreads.com/quotes/346824-water-is-sufficient-the-spirit-moves-over-water#:%7E:text=Quote%20by%20Friedrich%20Nietzsche%3A%20%E2%80%9CWater,the%20spirit%20moves%20over%20water.%E2%80%9D">as Nietzsche said</a> always suffices. In Dry July, you might even join the hype and call it non-alcoholic vodka.</p><img src="https://counter.theconversation.com/content/207728/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Cameron Shackell works for GeneriTrend, a firm using AI to quantify the genericness of brands and trademarks. Its customers at the time of publication do not include any drinks-related brands, alcoholic or otherwise.</span></em></p>Going alcohol-free can spare the hangover and save money - unless your new drink of choice is the zero-free version of certain high profile tipples.Cameron Shackell, Visiting Fellow, Queensland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1959072023-04-10T20:01:47Z2023-04-10T20:01:47ZAustralia’s system of taxing alcohol is ‘incoherent’, but our research suggests a single tax rate isn’t the answer<p>The best word to describe the way Australia taxes alcoholic drinks is “<a href="https://cdn.theconversation.com/static_files/files/2531/2009_Henry_Tax_Review_Alcohol.pdf">incoherent</a>”.</p>
<p>It was the word used by the 2010 <a href="https://cdn.theconversation.com/static_files/files/2532/Henry_Tax_Review_alcohol_chapter-compressed.pdf">Henry Tax Review</a> to describe a <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Budget_Office/Publications/Research_reports/Alcohol_taxation_Australia">system</a> in which some wine effectively faces <a href="https://www.ato.gov.au/business/wine-equalisation-tax/producer-rebate/">no alcohol tax</a>, expensive wine is taxed heavily and cask wine lightly, beer (but not wine) is taxed by alcohol content, <a href="https://www.thespiritsbusiness.com/2023/01/call-to-fix-spirits-tax-system-in-australia/">brandy</a> is taxed less than other spirits, and <a href="https://www.cideraustralia.org.au/resources/regulation/">cider</a> is taxed differently to beer.</p>
<p>Industry calculations suggest cask wine is taxed at as little as <a href="https://australiandistillers.org.au/news/13077677">six cents</a> per standard drink, mid-price wine at 26 cents, bottled beer at 56 cents, and spirits at $1.24.</p>
<hr>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/519724/original/file-20230406-22-e6emfc.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/519724/original/file-20230406-22-e6emfc.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/519724/original/file-20230406-22-e6emfc.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=214&fit=crop&dpr=1 600w, https://images.theconversation.com/files/519724/original/file-20230406-22-e6emfc.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=214&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/519724/original/file-20230406-22-e6emfc.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=214&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/519724/original/file-20230406-22-e6emfc.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=269&fit=crop&dpr=1 754w, https://images.theconversation.com/files/519724/original/file-20230406-22-e6emfc.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=269&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/519724/original/file-20230406-22-e6emfc.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=269&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://australiandistillers.org.au/news/13077677">Australian Distillers Association</a></span>
</figcaption>
</figure>
<hr>
<p>And yet it is cask wine that is often said to <a href="https://www.news.com.au/lifestyle/food/drink/cask-wine-partially-banned-in-geraldton-wa-after-spike-in-alcoholrelated-violence/news-story/012d107db4f3963c06b38535f0ab7c39">do the most damage</a>.</p>
<p>The Henry Review recommended taxing all drinks containing more than a small amount of alcohol at the <a href="https://cdn.theconversation.com/static_files/files/2532/Henry_Tax_Review_alcohol_chapter-compressed.pdf">same rate</a> per unit of alcohol, regardless of type. It was a recommendation backed by specialists in <a href="https://doi.org/10.1111/j.1759-3441.2010.00063.x">Australia’s tax system</a>.</p>
<p>Implicit, and largely unexamined, in these recommendations is the assumption that alcohol does the same damage in whatever form it is taken.</p>
<p>Our <a href="https://doi.org/10.1111/1475-4932.12704">new study</a>, linking drinkers’ risky behaviours to the types of alcoholic beverages they mostly consume, finds this isn’t so.</p>
<h2>Damage depends on the type of drink</h2>
<p>Using data from six waves of an <a href="https://www.aihw.gov.au/getmedia/3564474e-f7ad-461c-b918-7f8de03d1294/aihw-phe-270-NDSHS-2019.pdf.aspx">Australian recreational drug survey</a>, we find that regular-strength beer and pre-mixed spirits in a can rank among the highest in their links to both drink-driving and hazardous, disturbing or abusive behaviours. </p>
<p>Mid-range are mid-strength beer, cask wine, and bottled spirits and liqueurs.</p>
<p>At the bottom are low-strength beer and pre-mixed spirits in a bottle, which have the weakest links to risky and abusive behaviours when intoxicated.</p>
<hr>
<p><strong>Probability of drink driving, by age and beverage type</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/519738/original/file-20230406-16-t6mkm9.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/519738/original/file-20230406-16-t6mkm9.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/519738/original/file-20230406-16-t6mkm9.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=377&fit=crop&dpr=1 600w, https://images.theconversation.com/files/519738/original/file-20230406-16-t6mkm9.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=377&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/519738/original/file-20230406-16-t6mkm9.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=377&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/519738/original/file-20230406-16-t6mkm9.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=474&fit=crop&dpr=1 754w, https://images.theconversation.com/files/519738/original/file-20230406-16-t6mkm9.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=474&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/519738/original/file-20230406-16-t6mkm9.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=474&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">RSB = Regular-Strength Beer; LSB = Low-Strength Beer; MSB = Mid-Strength Beer; BW = Bottled Wine; FW = Fortified Wine; CW = Cask Wine; PMSC = Pre-Mixed Spirits in a Can; PMSB = Pre-Mixed Spirits in a Bottle; BS = Bottled Spirits and Liqueurs.</span>
<span class="attribution"><a class="source" href="https://onlinelibrary.wiley.com/doi/10.1111/1475-4932.12704">Source: Economic Record</a></span>
</figcaption>
</figure>
<hr>
<p>Some of the relationships vary with the type of damage. While bottled wine is linked to a moderate to high probability of drink-driving, it is also linked to a low probability of hazardous, disturbing or abusive behaviours. </p>
<p>Pre-mixed spirits in a bottle are related to a low probability of both drink driving and hazardous, disturbing and abusive behaviours. But when account is taken of the gender of the drinkers (so-called alcopops are typically drunk by females), we find them no longer as safe.</p>
<hr>
<p><strong>Probability of hazardous, disturbing or abusive behaviour</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/519743/original/file-20230406-18-i30zeg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/519743/original/file-20230406-18-i30zeg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/519743/original/file-20230406-18-i30zeg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=380&fit=crop&dpr=1 600w, https://images.theconversation.com/files/519743/original/file-20230406-18-i30zeg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=380&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/519743/original/file-20230406-18-i30zeg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=380&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/519743/original/file-20230406-18-i30zeg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=477&fit=crop&dpr=1 754w, https://images.theconversation.com/files/519743/original/file-20230406-18-i30zeg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=477&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/519743/original/file-20230406-18-i30zeg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=477&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">RSB = Regular-Strength Beer; LSB = Low-Strength Beer; MSB = Mid-Strength Beer; BW = Bottled Wine; FW = Fortified Wine; CW = Cask Wine; PMSC = Pre-Mixed Spirits in a Can; PMSB = Pre-Mixed Spirits in a Bottle; BS = Bottled Spirits and Liqueurs.</span>
<span class="attribution"><a class="source" href="https://onlinelibrary.wiley.com/doi/10.1111/1475-4932.12704">Source: Economic Record</a></span>
</figcaption>
</figure>
<hr>
<p>Our study suggests that Australia’s haphazard system of taxing alcohol might have got some things right. Beer, which is typically taxed more highly than wine, seems to do more damage.</p>
<p>But it has got some things wrong. Cask wine appears to be significantly undertaxed relative to the damage it does.</p>
<p>More broadly, our findings suggest that if alcohol is to be taxed according to the damage it does, the tax system we adopt will need to be more complicated than a single rate for every unit of alcohol regardless of the form in which it comes.</p><img src="https://counter.theconversation.com/content/195907/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Beer does more social damage than wine, suggesting it’s right to tax it more highly. But cask wine seems to be significantly undertaxed.Ou Yang, Research Fellow, The University of MelbournePreety Pratima Srivastava, Senior Lecturer, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1083352018-12-11T19:05:17Z2018-12-11T19:05:17ZWhat’s the most value for money way to tackle obesity? Increase taxes on alcohol<figure><img src="https://images.theconversation.com/files/249902/original/file-20181211-76965-tqj4i3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australians drink more than nine litres of pure alcohol a year.</span> </figcaption></figure><p>We don’t often equate the kilojoules we drink in our glass of wine or pint of beer with the weight that accumulates around our middle. But our new <a href="http://www.aceobesitypolicy.com.au/">study</a> shows increasing the price of alcohol is the most value for money policy option to prevent obesity in Australia. </p>
<p>The study, released today, shows if we increase alcohol taxes by standardising them across different types of alcohol, overall alcohol consumption would go down. This would lead to substantial reductions in the kilojoules Australians consume each day. </p>
<p>In 2016-17, Australians drank <a href="http://www.abs.gov.au/ausstats/abs@.nsf/latestProducts/4307.0.55.001Media%20Release12016-17">186 million litres of pure alcohol</a> – equivalent to more than nine litres for each person over the age of 15 years. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/think-before-you-drink-alcohols-calories-end-up-on-your-waistline-37403">Think before you drink: alcohol's calories end up on your waistline</a>
</strong>
</em>
</p>
<hr>
<p>The health and social harms associated with drinking too much are <a href="https://www.who.int/news-room/fact-sheets/detail/alcohol">well documented</a>. Our research is among the first to show that policies aimed at reducing alcohol consumption would also have significant impacts on body weight. </p>
<h2>Current taxes on alcohol</h2>
<p>Australia’s current alcohol taxation system is <a href="http://fare.org.au/policy/pricing-taxation/">complex and illogical</a>. Most alcoholic beverages are taxed based on their alcohol content, but different rates of tax are applied to different products. </p>
<p>Beers have the lowest rates, and spirits and ready-to-drink beverages (such as a can of bourbon and cola) have the highest. </p>
<p>Wine is taxed using a different system (the <a href="https://www.ato.gov.au/business/wine-equalisation-tax/">wine equalisation tax</a>) based on its final wholesale price.</p>
<p>Under the current system, the <a href="https://www.sciencedirect.com/science/article/pii/S0376871616300539?via%3Dihub">total price</a> (including taxation, in 2013 prices) of a standard drink (equivalent to 10g of alcohol) varies from around A$0.65 for cask wine to A$2.79 for ready-to-drink beverages.</p>
<h2>Proposed new tax regime</h2>
<p>Public health groups have long <a href="http://fare.org.au/wp-content/uploads/MJA-Optimal-rates-of-alcohol-taxation-Sep-2015.pdf">advocated</a> for reforms to the current alcohol taxation system in Australia. </p>
<p>Our research group modelled the impact of replacing the current system with a uniform volumetric tax, based on alcohol content. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/fifty-years-on-time-to-call-it-a-day-for-cheap-wine-casks-40637">Fifty years on, time to call it a day for cheap wine casks</a>
</strong>
</em>
</p>
<hr>
<p>We applied a tax of 84 cents per standard drink across all alcoholic beverages (beers, wines, spirits and ready-to-drink products). This is equivalent to a 10% increase to the rate currently applied to spirits. </p>
<p>This proposed change would have the biggest impact on the price of cask wine, increasing it by more than 120%. The price of beer will increase by 28% on average, bottled wine by around 33%, and ready-to-drink alcoholic beverages by 2.7%.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/249890/original/file-20181211-76980-7bcldc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/249890/original/file-20181211-76980-7bcldc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/249890/original/file-20181211-76980-7bcldc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=701&fit=crop&dpr=1 600w, https://images.theconversation.com/files/249890/original/file-20181211-76980-7bcldc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=701&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/249890/original/file-20181211-76980-7bcldc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=701&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/249890/original/file-20181211-76980-7bcldc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=881&fit=crop&dpr=1 754w, https://images.theconversation.com/files/249890/original/file-20181211-76980-7bcldc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=881&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/249890/original/file-20181211-76980-7bcldc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=881&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Deakin University</span></span>
</figcaption>
</figure>
<h2>Impact on health</h2>
<p>Increasing the price of alcohol is one of the most effective ways of <a href="https://www.vichealth.vic.gov.au/media-and-resources/publications/strengthening-the-evidence-base-for-volumetric-taxation-of-alcohol">reducing consumption</a>. </p>
<p>Alcohol is high in kilojoules, with a pint of beer almost on par with a chocolate bar in terms of energy content. So even relatively small levels of alcohol consumption can have a <a href="http://www.abs.gov.au/ausstats/abs@.nsf/lookup/4364.0.55.007main+features12011-12">big impact</a> on daily energy intake. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/249895/original/file-20181211-76977-18ucd01.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/249895/original/file-20181211-76977-18ucd01.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/249895/original/file-20181211-76977-18ucd01.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/249895/original/file-20181211-76977-18ucd01.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/249895/original/file-20181211-76977-18ucd01.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/249895/original/file-20181211-76977-18ucd01.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/249895/original/file-20181211-76977-18ucd01.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Pint or chocolate bar? They’re just about equal in kiljoules.</span>
<span class="attribution"><a class="source" href="https://unsplash.com/photos/LVE8S1FozK0">Seth Weisfeld</a></span>
</figcaption>
</figure>
<p>Our modelling showed that the proposed new tax regime would, on average, result in a 16% reduction in alcohol consumption across the population. This would lead to average weight loss of around 0.7kg.</p>
<p>When this is modelled over the lifetime of the whole population, the health impact is substantial. It is estimated that this tax change could prevent more than 190,000 cases of diabetes and 16,000 cases of cancer. </p>
<p>In total, the policy change could result in more than 470,000 healthy life years gained for the Australian population.</p>
<p>By preventing obesity-related diseases, this policy would save about A$4.8 billion in health-care costs. </p>
<p>These savings are much higher than the total costs of administering this change to the tax system, at A$31.9 million. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/ten-reasons-some-of-us-should-cut-back-on-alcohol-70406">Ten reasons some of us should cut back on alcohol</a>
</strong>
</em>
</p>
<hr>
<p>The health impacts are in addition to the <a href="http://www.health.gov.au/internet/drugstrategy/publishing.nsf/Content/alc-strategy/%24FILE/alcohol_strategy_back.pdf">many other benefits</a> of reduced alcohol consumption. These include the prevention of several chronic diseases (including liver cirrhosis and breast cancer), injuries, road accidents and violence.</p>
<p>The additional revenue collected from this new tax regime compared to the current taxation system would be around A$2.3 billion each year. </p>
<h2>We need an obesity prevention strategy</h2>
<p>The Council of Australian Governments (COAG) Health Council recently <a href="https://www.coaghealthcouncil.gov.au/Portals/0/CHC%20Communique%20121018.pdf">committed</a> to develop a national obesity strategy. In addition, the Senate Select Committee into the obesity epidemic in Australia released a report last week that set out a number of <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Obesity_epidemic_in_Australia/Obesity/Final_Report">recommendations</a> for government. These initiatives recognise that a range of policies are needed to address the current obesity crisis.</p>
<p>In addition to the alcohol tax changes, <a href="http://www.aceobesitypolicy.com.au/">our study</a> examined the cost-effectiveness of 15 other obesity prevention policies. These included <a href="https://www.mdpi.com/2072-6643/10/5/622/pdf">bans on TV advertising for unhealthy foods</a>, a 20% <a href="https://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.1002326">tax</a> on sugary drinks, the <a href="https://www.mdpi.com/2072-6643/10/5/614">Health Star Rating</a> food labelling system, and interventions targeted at schools, workplaces, supermarkets, local communities and private health insurers.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/249899/original/file-20181211-76983-19qyydz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/249899/original/file-20181211-76983-19qyydz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=390&fit=crop&dpr=1 600w, https://images.theconversation.com/files/249899/original/file-20181211-76983-19qyydz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=390&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/249899/original/file-20181211-76983-19qyydz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=390&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/249899/original/file-20181211-76983-19qyydz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=490&fit=crop&dpr=1 754w, https://images.theconversation.com/files/249899/original/file-20181211-76983-19qyydz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=490&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/249899/original/file-20181211-76983-19qyydz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=490&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A range of policy measures are needed to reduce rates of obesity.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/young-woman-putting-goods-on-counter-394230274?src=hDnbqoKLEZXKLnTbsRyQcA-1-2">Photobac/Shutterstock</a></span>
</figcaption>
</figure>
<p>We found that all of the interventions evaluated would result in substantial health benefits for Australia and offer good value for money. There are a broad range of promising policies that can be acted on by a range of decision makers including local, state and federal governments and the private sector.</p>
<p>Even though increasing the price of alcohol is likely to be unpopular, if governments are committed to an effective national obesity strategy then an increase in alcohol taxation should be considered as one part of a comprehensive societal response.</p><img src="https://counter.theconversation.com/content/108335/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jaithri Ananthapavan receives funding from the National Health and Medical Research Council (NHMRC). </span></em></p><p class="fine-print"><em><span>Gary Sacks receives funding from the Australian Research Council (ARC) and the National Health and Medical Research Council (NHMRC).</span></em></p><p class="fine-print"><em><span>Vicki Brown receives funding from the National Health and Medical Research Council (NHMRC). </span></em></p>It may not be popular, but an increase in the cost of alcohol would make us drink less and consume fewer kilojoules.Jaithri Ananthapavan, Senior Research Fellow, Health Economics, Deakin UniversityGary Sacks, Associate Professor, Deakin UniversityVicki Brown, Research Fellow, Deakin Health Economics, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1000242018-07-19T06:29:52Z2018-07-19T06:29:52ZRising reliance on personal income tax signals need for bolder reforms<p>The Parliamentary Budget Office (PBO) has just <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Budget_Office/Publications/Research_reports/Trends_affecting_the_sustainability_of_Commonwealth_taxes">released a report</a> on trends in Commonwealth taxation receipts. While supporting the expectations of a budget in balance by 2019-20, it exposes worrying trends in the balance of the burden of taxes in Australia. In particular, its analysis of trends in the composition of tax revenue identifies an increasing reliance on personal income tax.</p>
<p>The PBO shows that tax revenue from labour (mostly income tax) was 8.6% of GDP in 1971-72. By 2015/16, this had risen to 12.6% of GDP. Over the same period, tax collections from capital (mostly company tax) as a percentage of GDP was virtually unchanged, from 3.3% to 3.2% – although this increased noticeably during the “economic boom”, which ended when the Global Financial Crisis (GFC) hit in 2007. </p>
<p>Taxes on consumption (such a GST and excise duties) were 5.3% of GDP in 1971-72 and 5.7% of GDP in 2015-16. While the introduction of the GST in July 2001 raised consumption taxes temporarily, revenue from both GST and particularly excise taxes has been in decline as a percent of GDP since. </p>
<p>Figure 2 from the report shows these trends over the decades.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/228358/original/file-20180719-142435-1roakki.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/228358/original/file-20180719-142435-1roakki.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/228358/original/file-20180719-142435-1roakki.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=327&fit=crop&dpr=1 600w, https://images.theconversation.com/files/228358/original/file-20180719-142435-1roakki.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=327&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/228358/original/file-20180719-142435-1roakki.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=327&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/228358/original/file-20180719-142435-1roakki.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=411&fit=crop&dpr=1 754w, https://images.theconversation.com/files/228358/original/file-20180719-142435-1roakki.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=411&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/228358/original/file-20180719-142435-1roakki.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=411&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Trends in revenue from categories of Commonwealth taxes.</span>
<span class="attribution"><a class="source" href="https://www.aph.gov.au/~/media/05%20About%20Parliament/54%20Parliamentary%20Depts/548%20Parliamentary%20Budget%20Office/Reports/Research%20reports/02_2018%20Sustainability%20of%20Australian%20taxes/Trends%20affecting%20the%20sustainability%20of%20Commonwealth%20taxes%20-%20Data.XLSX?la=en">Source: ATO data and PBO analysis</a></span>
</figcaption>
</figure>
<p>The main emphasis of the PBO report is on the period since 2001-02. The chart below shows the increased reliance on income tax and declining importance of taxes on consumption and capital.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/228378/original/file-20180719-142408-1js855h.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/228378/original/file-20180719-142408-1js855h.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/228378/original/file-20180719-142408-1js855h.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/228378/original/file-20180719-142408-1js855h.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/228378/original/file-20180719-142408-1js855h.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/228378/original/file-20180719-142408-1js855h.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/228378/original/file-20180719-142408-1js855h.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/228378/original/file-20180719-142408-1js855h.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<h2>What is driving these shifts?</h2>
<p>The main reason for the rise in income tax revenue is “bracket creep” as incomes increase and taxpayers move into higher marginal tax brackets. This is due to successive governments not fully indexing tax brackets to increases in CPI or average earnings.</p>
<p>Meanwhile, consumers have been changing their tastes and responding to prices by altering their consumption patterns. The so-called “sin taxes”, or rates of excise duties on alcohol and tobacco, have increased significantly over time. </p>
<p>This has been particularly true for tobacco where the volume of consumption has fallen as fewer people smoke and those who do smoke less. However, the percentage fall in consumption has been less than the percentage rise in tax, so tobacco tax revenue has risen. </p>
<p>For alcohol, consumers have been switching from more highly taxed beer to wine, which is more lightly taxed. For instance, a full-strength beer from your bottle shop carries a tax of $37.10 per litre of alcohol. A moderately priced bottle of wine bears a tax less than half that ($17.60 per litre). </p>
<p>What might be considered a distortion in the taxing of alcohol means that changes in tastes towards drinking wine reduce tax revenue. The system of taxing alcohol is distorting in that encourages changing consumption habits away from beer drinking to wine.</p>
<p>Fuel excise is levied on a number of fuels but revenue comes mainly from petrol sales. The indexing of fuel excise rates was abolished in 2001 before being reintroduced in 2014. This reduction in the real excise rates was accompanied by significant reduction in the volume of fuel per household, from 11.4 L/km in 2001 to 10.6 L/km in 2016, as vehicles became more fuel-efficient. </p>
<p>The combination of reduced real excise rates and reduced consumption have reduced fuel excise revenue as a percentage of GDP.</p>
<p>The GST, one of the principal aims of which was to provide a broadly based growth tax, is declining in relative importance. This is mainly due to the exemptions from the GST base. For instance, spending on education and health, which are exempt from GST, is growing faster than spending on other goods and services. There is also some loss in revenue due to online purchases from overseas, which the government is trying to address. </p>
<p>As the share of consumers’ spending continues to switch from GST-liable to GST-exempt items the share of GST revenue will continue to fall.</p>
<p>Company taxes have diminished in importance in Australia and elsewhere because of the way multinational companies can arrange their tax liabilities across national borders to minimise tax. However, there is also worldwide recognition of the need to reduce company tax rates because of the detrimental effects these have on investment and growth.</p>
<h2>The need to cut ‘deadweight loss’</h2>
<p>When discussing taxes economist often refer to “deadweight loss”, which is the loss to the economy over and above the amount recouped in tax revenue. When revenue is taken from individuals or companies this results in less of a service or good being produced.</p>
<p>It is argued that governments should put more reliance on taxes that cause less distortion – less deadweight loss. That is, they should have as little effect on individuals’ and firms’ behaviour as possible. </p>
<p>A broad-based GST is efficient because all goods and services bear the same tax rate and therefore will not change relative consumption. It is exemptions that bring about inefficiency by encouraging consumption of untaxed items and discouraging consumption of taxed items. Taxing wine more lightly than beer encourages wine consumption at the expense of beer.</p>
<p>The Australian Treasury has named company tax and income tax as having the <a href="https://treasury.gov.au/publication/understanding-the-economy%E2%80%91wide-efficiency-and-incidence-of-major-australian-taxes/">“biggest deadweight loss” of all the Commonwealth taxes</a>. International research backs this up. The deadweight loss falls on consumers and shareholders but mostly on workers and wages through lower investment. </p>
<p>The Treasury estimates the deadweight loss of company tax could be more than half the revenue raised from taxation. For income taxes, the deadweight loss is estimated to be 21 cents for every dollar of revenue. This comes about from reduced incentives to work, save or invest.</p>
<p>The PBO report suggests that with continuing trends in taxation revenue the budget’s reliance on personal income tax will increase if current levels of Commonwealth taxation are maintained as a percentage of GDP. While proposals to reduce company tax rates will reduce inefficiency of taxes somewhat, a heavy and increasing reliance on personal income tax points to the need for substantial tax reform. But that’s something neither major party seems prepared to do.</p><img src="https://counter.theconversation.com/content/100024/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Phil Lewis does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article. He also has no relevant affiliations. During his career he has received funding from many private and public sector organisations including most recently the ARC, NCVER, DEEWR, the AFPC, ABLA and CPA Australia.</span></em></p>Personal income taxpayers are shouldering more of the burden, while less revenue is coming from taxes on companies, capital and consumption. Only major reforms will change these sustained trends.Phil Lewis, Professor of Economics, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/406372015-06-17T20:17:27Z2015-06-17T20:17:27ZFifty years on, time to call it a day for cheap wine casks<figure><img src="https://images.theconversation.com/files/81336/original/image-20150512-31693-1ox2wxm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Almost one-third (31.6%) of cask wine drinkers drink daily, compared with 7.9% of bottled wine drinkers.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/johnsyweb/116713545/">Johnsyweb/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>In 1965 Sir Robert Menzies was Prime Minister of Australia, Charles Perkins led the <a href="http://indigenousrights.net.au/civil_rights/freedom_ride,_1965">Freedom Ride</a> protesting against racial discrimination against Aboriginal people, and on April 20, a patent was issued to winemaker Thomas Angove’s company for the first wine cask.</p>
<p>Since then, as the wine industry’s “<a href="http://askforcask.com.au/">Ask for Cask</a>” promotion campaign tells us, casks have been “part of our lifestyle”. </p>
<p>According to a <a href="http://www.fare.org.au/wp-content/uploads/2012/09/What-Australians-Drink.pdf">2012 report</a> from the Foundation for Alcohol Research and Education (FARE), cask wine use is most popular among the youngest and oldest age groups and in less affluent neighbourhoods. Almost one-third (31.6%) of cask wine drinkers drink daily, compared with 7.9% of bottled wine drinkers. </p>
<p>For some people, wine casks simply provide a useful way of storing cheap wine without having to worry about the bottle being open too long. But the “goon bag” is also a cheap way for young people and others to <a>get drunk</a>. </p>
<p>A <a href="http://db.ndri.curtin.edu.au/research/research.asp?resprtyid=25&typeid=1&projid=689">study</a> of 18- to 21-year-old West Australian drinkers elicited comments such as:</p>
<blockquote>
<p>Cheap alcohol is really important for younger people as we can’t afford anything else. Goon will be the lowest of lows you can go.</p>
<p>It’s part of our national stereotype, that Australians drink lots of alcohol at pubs, and many of our national cultural images include XXXX cans, Goon bags, VB, etc.</p>
</blockquote>
<p>Alcohol advertisers generally deny targeting the young, despite so much evidence to the contrary. When a cask is produced in the form of a handbag, it’s hard to imagine that young women are not the intended market.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/81347/original/image-20150512-22545-ty87dh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/81347/original/image-20150512-22545-ty87dh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/81347/original/image-20150512-22545-ty87dh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/81347/original/image-20150512-22545-ty87dh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/81347/original/image-20150512-22545-ty87dh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/81347/original/image-20150512-22545-ty87dh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/81347/original/image-20150512-22545-ty87dh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Cask wine is often marketed to young women.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/mbiddulph/3849753678/">Matt Biddulph/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>Prices vary, as with any such product, but around A$2 a litre is not uncommon. All too often one of the major alcohol retailers will be offering an even bigger discount when two or three wine casks are purchased together.</p>
<p>Our alcohol tax system – rightly described by the <a href="http://www.taxreview.treasury.gov.au/content/FinalReport.aspx?doc=html/publications/Papers/Final_Report_Part_2/chapter_e5-2.htm">Henry Review</a> as “incoherent” – discriminates massively in favour of cheap wine. Wine is taxed on its wholesale value, not its alcohol content, through the <a href="https://www.ato.gov.au/business/wine-equalisation-tax/">Wine Equalisation Tax</a> (WET). </p>
<p>So, the cheaper the wine, the less it is taxed. The government collects tiny amounts per standard drink for cask wine, compared with other alcoholic products such as beer and spirits. </p>
<p>The WET is an anomaly that serves no interests except some in the liquor industry. At a time when there is so much evidence about the catastrophic damage caused by alcohol – from the obvious consequences of drink-driving or drunken violence, to the hidden harms that range from cancers to domestic violence, and longer-term harms to children’s developing brains – this anomaly should go. </p>
<p>The federal government should instead introduce a volumetric tax system based on a product’s alcohol content, while ensuring that this does not reduce the price of spirits. </p>
<p>A <a href="http://www.ncbi.nlm.nih.gov/pubmed/19149811">major 2009 review</a> of 112 studies concluded unequivocally not only that “beverage alcohol prices and taxes are related inversely to drinking”, but that “effects are large compared to other prevention policies and programs” and “policies that raise prices of alcohol are an effective means to reduce drinking”. </p>
<p>A <a href="http://www.ncbi.nlm.nih.gov/pubmed/19560605">further review</a> found that:</p>
<blockquote>
<p>making alcohol more expensive and less available, and banning alcohol advertising, are highly cost-effective strategies to reduce harm.</p>
</blockquote>
<p><a href="http://www.fare.org.au/wp-content/uploads/2015/03/FARE-pre-budget-submission-feb-2015.pdf">FARE has estimated</a> that ridding the alcohol tax system of its bias towards cheap and cask wine and implementing a well-planned volumetric tax could raise more than A$3.4 billion over four years – surely a gift horse for any government in harsh economic times. </p>
<p>That, of course, is in addition to any savings from reduced alcohol-related harms, the cost of which is <a href="http://www.nationaldrugstrategy.gov.au/internet/drugstrategy/publishing.nsf/Content/0A14D387E42AA201CA2574B3000028A8/$File/mono70.pdf">estimated at upwards of A$15 billion</a> a year.</p>
<p>There are sound commercial reasons for other producers to support tax reform, just as there are sound political reasons for some states to support what is effectively a subsidy for their wine-growing industries. South Australia in particular has a long history of lobbying to maintain the WET, as part of its support for the cheap and nasty component of the wine industry that flourishes there. </p>
<p>As long as the product is available, cheap and attractive, the big chains that dominate the market will continue to sell and promote it. </p>
<p>Federal Treasurer Joe Hockey should not have to rely on white papers, submissions and delays before announcing the measure in the next budget. He should act now to reform Australia’s outdated and chaotic alcohol tax system and consign dirt cheap wines to history. He should then allocate at least some of the additional revenue to funding for prevention and treatment programs. </p>
<p>That would be a doubly welcome way to celebrate the 50th anniversary of the cask.</p><img src="https://counter.theconversation.com/content/40637/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mike Daube is Director of the McCusker Centre for Action on Alcohol and Youth and co-chair of the National Alliance for Action on Alcohol.</span></em></p>The “goon bag” is a cheap way for young people and others to get drunk.Mike Daube, Professor of Health Policy, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/418842015-05-21T04:36:07Z2015-05-21T04:36:07ZDon’t believe the hype, teens are drinking less than they used to<figure><img src="https://images.theconversation.com/files/82340/original/image-20150520-25039-1mkxm2i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Teenage drinking in Australia has declined dramatically over the past fifteen years.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/wanderlust_heart/4602555704/">tristanforestjames/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>Ask your friends and colleagues about young Australians and alcohol and I bet they’ll say something about a <a href="http://www.news.com.au/lifestyle/parenting/drunk-and-confused-weekend-drinking-is-hitting-the-performance-of-our-teenagers-in-school/story-fnjco7gt-1226846282552.">generation out of control</a> or a <a href="http://www.heraldsun.com.au/news/victoria/young-women-in-binge-drinking-epidemic/story-e6frf7kx-1226630740211">binge-drinking epidemic</a>. </p>
<p>The media regularly brings the <a href="http://www.abc.net.au/news/2014-08-16/sydney-alcohol-free-gigs-tackle-booze-culture/5675484">worst outcomes</a> of young people’s drinking to our attention and points to a problematic drinking culture supposedly unique to young Australians. Little wonder people believe things have never been so bad.</p>
<p>The reality is startlingly different. Data <a href="http://abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4307.0.55.001Main+Features12013-14?OpenDocument">recently released by the Australian Bureau of Statistics</a> shows alcohol consumption in Australia has reached its lowest point since the early 1960s, having declined steadily since the mid-2000s. Survey data suggests this decline has been driven almost entirely by reductions in youth drinking. </p>
<p>According to the <a href="http://onlinelibrary.wiley.com/doi/10.1111/dar.12255/abstract">National Drug Strategy Household Survey</a>, the proportion of 12- to 15-year-olds who reported any drinking in the past year halved, from 35% in 2004 to 18% in 2013. Over the same time, drinking by 16- to 17-year-olds fell sharply as well, from 81% to 59%. </p>
<p>In case you think there must be something wrong with this survey, results from the <a href="http://www.nationaldrugstrategy.gov.au/internet/drugstrategy/Publishing.nsf/content/school11">Australian Secondary Students Alcohol and Drug Survey</a> show similar trends. Between 2002 and 2011, drinking in the past week fell by more than half for 12- to 15-year-olds (from 29% to 11%) and nearly as sharply for 16-17 year olds (48% to 33%). </p>
<p>Rates of heavy drinking have <a href="http://www.nationaldrugstrategy.gov.au/internet/drugstrategy/Publishing.nsf/content/school11">fallen</a> as well. Teenagers in Australia are drinking less alcohol now than they have at any time since these surveys began in the early 1980s.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/82350/original/image-20150520-24994-1xk16xy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/82350/original/image-20150520-24994-1xk16xy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/82350/original/image-20150520-24994-1xk16xy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/82350/original/image-20150520-24994-1xk16xy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/82350/original/image-20150520-24994-1xk16xy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/82350/original/image-20150520-24994-1xk16xy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/82350/original/image-20150520-24994-1xk16xy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">In 2011, one-third (33%) of 16- to 17-year-olds reported drinking in the past week, down from almost half (48%) in 2002.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/garryknight/4660207930/">Garry Knight/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>There is increasing evidence that these patterns are holding as this cohort of teenagers moves into young adulthood, with <a href="http://www.aihw.gov.au/publication-detail/?id=60129549469">weekly risky drinking</a> among 18- to 24-year-olds dropping from 32% to 22% between 2010 and 2013. Declines in drinking are occurring for boys and girls, across all socioeconomic groups and in regional and urban areas. The changes are <a href="http://onlinelibrary.wiley.com/doi/10.1111/add.12524/abstract">not isolated</a> in particular population sub-groups. </p>
<p>Remarkably, these trends seem to be part of a global shift. A <a href="http://eurpub.oxfordjournals.org/content/25/suppl_2/69">recent paper</a> identified significant declines in underage drinking in 20 of the 28 countries studied. In countries with similar drinking cultures to Australia such as the United Kingdom, Canada, and Sweden, teen drinking has halved. </p>
<p>Somewhat surprisingly, little attention has been paid to these trends or the reasons behind them. Based on <a href="http://www.nationaldrugstrategy.gov.au/internet/drugstrategy/Publishing.nsf/content/school11">Australian data</a>, we can be reasonably confident that young people aren’t shifting to illicit drugs instead of alcohol. Rates of cannabis and meth/amphetamine use have also declined in the past decade. </p>
<p>Similarly, it doesn’t seem likely that major policy changes have caused the trends. The decline in youth drinking started well before the <a href="http://www.theage.com.au/articles/2008/04/27/1208743339515.html">alcopops tax</a> in 2008, and alcohol has become more widely available and promoted in recent years. </p>
<p>Attitudes to alcohol have clearly been shifting in Australia, with <a href="http://www.fare.org.au/wp-content/uploads/2013/07/Australian-attitudes-towards-policy-FINAL.pdf">greater support</a> for restrictive policies, more <a href="http://alcalc.oxfordjournals.org/content/49/3/336">negative media coverage</a> and <a href="http://www.aihw.gov.au/publication-detail/?id=60129549469">increasing public concern</a>. These attitude shifts may be driving the declines in youth drinking, although it is notable that drinking among Australians older than 30 remains unchanged. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/82351/original/image-20150520-25033-1k375hb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/82351/original/image-20150520-25033-1k375hb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/82351/original/image-20150520-25033-1k375hb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/82351/original/image-20150520-25033-1k375hb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/82351/original/image-20150520-25033-1k375hb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/82351/original/image-20150520-25033-1k375hb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/82351/original/image-20150520-25033-1k375hb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Social media has reduced the centrality of drinking in socialising.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/eunix/3125117477/">Evgeny Pavlov/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span>
</figcaption>
</figure>
<p>It may be that decades of public education campaigns and school programs focusing on youth drinking have finally been effective, but <a href="http://onlinelibrary.wiley.com/doi/10.1002/ebch.1829/full">the broader research literature</a> suggests this is unlikely.</p>
<p>The global consistency of the trends suggests a broader shift in youth cultures might be driving change. One possibility is that the increase in the use of social media has altered the way young people interact, reducing the centrality of drinking in socialising. The <a href="http://www.cybersmart.gov.au/About%20Cybersmart/Research/ACMA%20research/Like-post-share.aspx">impact of the internet and social media</a> in young people’s lives has increased enormously in recent years. But there is little research into how these changes have affected drinking. </p>
<p><a href="http://search.informit.com.au/documentSummary;dn=200906331;res=IELAPA">Research has also shown</a> that exercising, eating well and avoiding alcohol and other drugs are important lifestyle choices for many young people. An increasing focus on healthy living may be an important factor in declining youth drinking. </p>
<p>The declines in youth drinking may have been caused by a combination of all of these factors. Further research is crucial so that current trends can be supported through appropriate interventions. </p>
<p>The recent dramatic reductions in teenage drinking is good news for public health, and is a refreshing counter-argument to the <a href="https://theconversation.com/images-of-australian-youth-from-symbols-of-hope-to-disposable-lives-27126">way young Australians</a> are often presented.</p><img src="https://counter.theconversation.com/content/41884/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Livingston has received research funding from The National Health and Medical Research Council, The Australian Research Council, The Victorian Health Promotion Foundation, The Australian National Preventative Health Agency and the Foundation for Alcohol Research and Education. He is currently funded by an Early Career Fellowship from the National Health and Medical Research Council (APP1053029). He is affiliated with the Drug Policy Modelling Program in the National Drug and Alcohol Research Centre at the University New South Wales and the Centre for Alcohol Policy Research at Turning Point.</span></em></p><p class="fine-print"><em><span>Amy Pennay has received research funding from the Australian Research Council, the National Health and Medical Research Council, the National Drug Law Enforcement Research Fund, Beyond Blue, the Victorian Health Promotion Foundation, the Foundation for Alcohol Research and Education and NSW Health. She is currently funded by an Early Career Fellowship from the National Health and Medical Research Council (APP1069907), and is affiliated with the School of Population and Global Health at the University of Melbourne and the Centre for Alcohol Policy Research at Turning Point. </span></em></p>Ask your friends and colleagues about young Australians and alcohol and I bet they’ll say something about a generation out of control or a binge-drinking epidemic.Michael Livingston, Post-Doctoral Research Fellow at The National Drug and Alcohol Research Centre, UNSW SydneyAmy Pennay, Research Fellow, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/271752014-05-28T05:04:01Z2014-05-28T05:04:01ZFunding health research: a win-win alternative to co-payments<figure><img src="https://images.theconversation.com/files/49440/original/p8bjgn7f-1401084112.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The $14 billion derived annually from tobacco and alcohol tax is already a pretty good bucket from which to fund health and medical research.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/reinis/3926296348/sizes/o/">Reinis Taidras/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>One of the most criticised components of the federal budget has been the <a href="https://theconversation.com/federal-budget-2014-health-experts-react-26577">proposed $7 co-payment</a> for GP visits and some medical tests. But there’s a healthy way the treasurer can have his cake and eat it too.</p>
<p>While the main debate has focused on the co-payments plan, it would be a pity if its love child, a substantial boost for health and medical research, disappeared from the equation.</p>
<p>There are other ways the government could provide all the funding promised for research and more – along with a standing ovation from health groups.</p>
<h2>Chorus of criticism</h2>
<p>Criticisms of co-payments have included that, whether for treatment or <a href="http://www.canberratimes.com.au/act-news/copayment-could-see-vaccination-rates-plummet-20140527-zrpkm.html">important preventive services</a>, they will <a href="https://theconversation.com/federal-budget-2014-health-experts-react-26577">deter people</a> who most need to visit GPs from doing so; they will <a href="https://ama.com.au/media/health-budget-full-pain-patients">reduce services to the aged</a>; they will <a href="http://www.abc.net.au/pm/content/2014/s4009259.htm">undermine the principles of Medicare</a>; the plan will turn doctors into <a href="http://blogs.crikey.com.au/croakey/2014/05/14/budget-2014-the-good-the-bad-and-the-ugly-but-mostly-the-ugly/">de facto tax collectors</a>; and it will all be <a href="https://ama.com.au/media/ama-transcript-ama-president-dr-steve-hambleton-abc-news-radio-tanya-nolan-16-may-2014">expensive and complex to administer</a>. </p>
<p>The intended sweetener was the government’s announcement that money from co-payments would go into a <a href="https://theconversation.com/proposed-medical-research-fund-is-unfair-and-unethical-26740">new medical research future fund</a>.</p>
<p>Health researchers are as keen as anyone else to attract more funding, but as <a href="https://theconversation.com/profiles/fiona-stanley-16277/profile_bio">Professor Fiona Stanley</a> (one of just four researchers recognised in treasurer Joe Hockey’s budget speech) commented, <a href="http://www.theaustralian.com.au/national-affairs/budget-2014/future-fund-both-curse-and-blessing/story-fnmbxudx-1226920693712#">not at the expense</a> of “the sickest, most marginalised, the poorest”.</p>
<h2>Positive steps</h2>
<p>To its credit, the government has maintained support for tobacco control, including plain packaging and a commitment to continuing funding for much-needed media campaigns.</p>
<p>A few months ago, it was praised by health groups for <a href="http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fems%2Fr5172_ems_78ed6212-03a3-4669-9947-c3fc17c8b5e0%22">implementing the first of four</a> successive 12.5% annual increases in tobacco excise (along with an improved approach to indexation). </p>
<p>Its rationale included emphasis on the need to “provide real health benefits” and to “move towards international best practice in the pricing of tobacco products”.</p>
<p>Increasing tobacco taxes is popular, especially if the funds are applied to worthy health purposes; the <a href="http://www.budget.gov.au/2014-15/content/bp1/html/bp1_bst5-03.htm">government estimates</a> it will derive $7.85 billion from tobacco taxes this year alone. Combined revenues from tobacco and alcohol taxes bring in some $13.8 billion.</p>
<h2>Crying out for reform</h2>
<p>The <a href="http://taxreview.treasury.gov.au/Content/Content.aspx?doc=html/home.htm">Australia’s Future Tax System Review</a> concluded that Australia’s alcohol tax system was incoherent" and recommended long-overdue reform. </p>
<p>The most obvious change is abolition of the [Wine Equalisation Tax (WET)](https://www.ato.gov.au/Business/Activity-statements/Wine-equalisation-tax-(WET), which discriminates in favour of cheap wine. The WET enables sale of products with high alcohol content at dirt-cheap prices. </p>
<p>Ending it would end the sale and promotion of cheap and nasty products and help to make major inroads into a wide range of alcohol harms. This simple measure alone should bring the government an estimated $500 million a year.</p>
<p>There’s massive community concern about the harms of alcohol. Only <a href="http://mcaay.org.au/assets/publications/market-research-reports/amr-omnibus_6qs_17062013_smaller-file.pdf">17% of respondents to an online survey</a> believed that governments are doing enough to address alcohol problems.</p>
<h2>A fourfold win</h2>
<p>When the treasurer told us with stars in his eyes that new research might find cures for cancer and heart disease, he might not have been aware of overwhelming evidence that reducing smoking would do more than any other single measure to reduce cancer and heart disease.</p>
<p>The money from tobacco and alcohol taxes is already a pretty good bucket from which to fund health and medical research. Tobacco excise increases alone would cover all the proposed funding for medical research – with enough left over to fund a mass of further initiatives. </p>
<p>A further modest increase in tobacco tax or an abolition of the WET would make this a financially painless process for the government. It could get all the benefits of increasing our medical research capacity without the downsides of introducing an unpopular co-payment scheme that will keep researchers (and ultimately reporters) busy charting its damaging impacts over time.</p>
<p>Indeed, it would be a win-win-win-win-win: meet the commitment to fund more health and medical research; improve the health of the community; bring added benefits to disadvantaged groups rather than put them at further risk; attract praise and support from health groups; and no public pain. </p>
<p>What more could any government want?</p><img src="https://counter.theconversation.com/content/27175/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mike Daube does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>One of the most criticised components of the federal budget has been the proposed $7 co-payment for GP visits and some medical tests. But there’s a healthy way the treasurer can have his cake and eat it…Mike Daube, Professor of Health Policy, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/65852012-05-13T20:36:01Z2012-05-13T20:36:01ZCalling time on alcohol taxation in Australia<figure><img src="https://images.theconversation.com/files/10194/original/7cvm925q-1335849380.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australia's approach to alcohol taxation is riddled with inconsistencies.</span> <span class="attribution"><span class="source">Johnsyweb</span></span></figcaption></figure><p>Alcohol is a prime target for taxation. It’s a good source of government revenue; it allows governments to recoup costs for providing services to drinkers (such as accident and emergency care and policing); it provides a mechanism for drinkers to pay for the harm they impose on others as a consequence of their drinking; it helps discourage excessive drinking due to information failure (not all drinkers are aware of all the risks of drinking and some harms are not yet understood) and drinkers’ tendency to discount the long-term harms of alcohol; and reduced consumption of alcohol has known public health benefits. Moreover, a recent Australian review of the evidence <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1360-0443.2009.02708.x/abstract">clearly showed alcohol taxation is cost-effective</a>.</p>
<p>Given the utility and cost-effectiveness of alcohol taxation, the challenge is to identify an optimally efficient tax system: one that maximises the potential benefits of restrained alcohol consumption for the least amount of cost to those who don’t consume alcohol to excess. </p>
<p>If an economist was asked to design the least efficient alcohol taxation system imaginable, it would more or less approximate the current Australian system. It would be blatantly unfair to lay the blame for this situation at the feet of any particular Commonwealth government. The current system is, ahem, a cocktail of mixed methodologies, ideologies, idiosyncrasies and the remnant battle-lines of long-forgotten policy negotiations.</p>
<p>Essentially, alcohol can be taxed as either a fixed amount per volume of alcohol (a fixed rate of tax per standard drink) or as a proportion of the wholesale price. Australia has both at the same time. Wine is taxed as a proportion of the wholesale price (called the wine equalisation tax), which means the tax applied to cask wine (around 60 cents per litre) is much lower than bottled wine (around $2.60 per litre) because it has a lower wholesale price. </p>
<p>All other types of alcohol products are taxed as a fixed amount per standard drink, although the fixed rate varies, not only between different types of beverages (beer and spirits, for example) but also between different types of containers (such as kegs and stubbies). In other words, you pay between 5 cents and nearly $1 in tax on your alcohol, depending on whether you buy draught beer, bottled beer, mid or high-strength beer, cheap wine, expensive wine, cider, straight spirits, pre-mixed spirits or brandy.</p>
<p>Although tinkering with the current alcohol tax system is tempting - because it is easier to negotiate amendments than an overhaul - perhaps it is time to draw breath and go for broke: take the lead from Apple’s army of geeks and scrap the current operating system in favour of a new, more efficient one. What might this look like? Let’s go back to our definition of optimal efficiency: maximise the benefits (in other words, reduce harms) and minimise the impact on those who don’t drink to excess. </p>
<p>Since alcohol harm is not beverage-specific (drinking too much is drinking too much), the most efficient method is to tax the alcohol, not the beverage type or its price. That would remove perverse incentives that currently distort drinkers’ choices between beverage types and would optimise the compensation paid by drinkers for increasing risks of harm and government costs, and reducing public health.</p>
<p>Taxing the alcohol content, known as a volumetric tax, requires a decision about the appropriate rate of tax per unit of alcohol and moving to this system will inevitably create winners and losers (essentially wine and beer would be relatively more expensive, while spirits would be relatively cheaper), but the principle is infinitely closer to optimal efficiency than is currently the case. Our modelling shows a volumetric tax would deliver both <a href="https://www.mja.com.au/journal/2010/192/8/cost-effectiveness-volumetric-alcohol-taxation-australia">significant health gains and increased taxation revenue</a>, compared to the existing taxation system.</p>
<p>However, a volumetric tax is not the only price control mechanism that could sensibly be utilised, for two reasons. First, although drinkers are sensitive to changes in alcohol prices, they are relatively price inelastic (that is, demand remains relatively strong despite price rises), which means there is a limit to how high the volumetric tax could be set before it unfairly impacts on relatively light drinkers. </p>
<p>Second, there is more than one type of harmful alcohol consumption: drinking too much on average; and drinking too much on one occasion (getting drunk). </p>
<p>Our modelling suggests that in response to a price increase, Australians will increase the number of days on which they do not drink at all (and reduce the number of days on which they only drink a bit) in order to preserve their financial ability to drink more heavily on the weekend. This suggests some people just like to get drunk, and you can do that quite a few times and still work out that the most financially savvy way to get drunk is to drink the cheapest alcohol. A volumetric tax would help inhibit such drinking but could be reinforced by complementary pricing controls, such as a minimum retail price (or floor price). Scotland and England have indicated <a href="http://www.guardian.co.uk/society/2012/mar/23/coalition-minimum-alcohol-price-40p">they will introduce this strategy in 2012</a>.</p>
<p>Unlike the current situation, this mix of price control strategies is not attempting to idiosyncratically amend one taxation system: it is a synthesis of two separate and equitable approaches. A volumetric tax would effectively transfer funds to the government to compensate them for the cost of mopping up the harms from excessive drinking, while a floor price would inhibit the availability of cheap alcohol. The practical difficulties of negotiating the introduction of a more optimal alcohol tax system are daunting and will require skilled politics, but it is time to untangle the mess. And it seems fair that researchers advocating for change ought equally be accountable for measuring the impact of a more optimal alcohol tax system. To paraphrase Dostoevsky: drinkers, politicians and researchers are all responsible for all.</p><img src="https://counter.theconversation.com/content/6585/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Josh Byrnes does not work for, consult to or own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.</span></em></p><p class="fine-print"><em><span>Anthony Shakeshaft does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Alcohol is a prime target for taxation. It’s a good source of government revenue; it allows governments to recoup costs for providing services to drinkers (such as accident and emergency care and policing…Anthony Shakeshaft, Associate Professor at National Drug and Alcohol Research Centre, UNSW SydneyJosh Byrnes, Research fellow in health economics, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/43522011-11-18T04:46:33Z2011-11-18T04:46:33ZHealth the casualty of Coles and Woolies alcohol price war<figure><img src="https://images.theconversation.com/files/5667/original/418589195_d1b386d74f_b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The real cost of the alcohol price war is the damage heavy drinking does to public health and the social fabric.</span> <span class="attribution"><span class="source">Rick Audet</span></span></figcaption></figure><p>In recent days, Woolworths and Coles have put out a flurry of media releases, each staking a claim to being the cheapest place to buy alcohol this summer. Coles have “declared war” on liquor prices and the Woolworths-owned Dan Murphy’s chain has fired back a response. </p>
<p>For the consumer, this all sounds like great news – an alcohol price war in the lead-up to Christmas. But for public health and safety, it’s worth thinking about the real cost of discounted drinks.</p>
<h2>Beyond price</h2>
<p>Recent estimates put the social cost of alcohol in Australia at around <a href="http://www.fare.org.au/wp-content/uploads/2011/07/The-Range-and-Magnitude-of-Alcohol%E2%80%99s-Harm-to-Others-report.pdf?9d7bd4">$36 billion a year</a>. Approximately half of these costs come from harms experienced by people other than the drinker. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/5670/original/photo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/5670/original/photo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=800&fit=crop&dpr=1 600w, https://images.theconversation.com/files/5670/original/photo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=800&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/5670/original/photo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=800&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/5670/original/photo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1005&fit=crop&dpr=1 754w, https://images.theconversation.com/files/5670/original/photo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1005&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/5670/original/photo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1005&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p>Alcohol contributes to a vast array of problems including cancer and liver disease, assaults, car accidents and other injuries, family dysfunction, neighbourhood disturbance and fear. </p>
<p>Recent work undertaken in Victoria demonstrates that problems from alcohol are increasing rapidly. <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1753-6405.2010.00568.x/abstract">Ambulance attendances, hospital admissions and assault rates have all increased by more than 50% in the last decade</a>. And, crucially, a key driver of rates of alcohol problems is price.</p>
<p>Studies from around the world have shown that rates of alcohol harms are affected by the cost of alcohol. Heavy drinkers and young people are particularly responsive to price changes. A <a href="http://ajph.aphapublications.org/cgi/content/abstract/100/11/2270">recent meta-analysis </a> highlighted the links between price and a wide range of harms, including hospitalisations and deaths, traffic accidents, violence and other crime and risky sexual behaviour. </p>
<p>It seems that there’s no such thing as a cheap drink. </p>
<h2>Race to the bottom</h2>
<p>In spite of this evidence, Woolworths and Coles have spent the last 12 months in a race to the bottom on alcohol prices. In March, both companies were only stopped from <a href="http://www.theage.com.au/business/beer-wars-big-retail-v-fosters-20110322-1c59d.html">selling beer at below-cost price</a> by pressure from manufacturers. </p>
<p>In April, the companies engaged in a <a href="http://www.theage.com.au/business/supermarket-price-war-switches-to-premixed-spirits-20110418-1dlp2.html">price-war on pre-mixed spirits</a>, selling a variety of brands at below wholesale prices.</p>
<p>Now, with schoolies week, the Christmas party season and New Year coming up (a peak time for alcohol-related harm), we see both Coles and Woolworths-owned retailers advertising cut-price alcohol. This includes some popular wines being sold for less than $1 per standard drink. </p>
<h2>Known harms</h2>
<p>Retailers are well aware of the problems associated with cheap alcohol. </p>
<p>Coles won’t offer these discounts in the Northern Territory or the north-west region of Western Australia: there are considerable problems with alcohol in these areas and this is a promising acknowledgement by the company that cheap alcohol will not help reduce them. </p>
<p>But alcohol is not merely an Indigenous problem. The most <a href="http://aihw.gov.au/publication-detail/?id=32212254712">recent national survey data </a>estimates that one in five Australians drink at levels that put them at risk of long-term harm from alcohol. Nearly one in three regularly drink at levels that put them at risk of injury.</p>
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<img alt="" src="https://images.theconversation.com/files/5668/original/6028200931_3e4a928b8a_b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/5668/original/6028200931_3e4a928b8a_b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=875&fit=crop&dpr=1 600w, https://images.theconversation.com/files/5668/original/6028200931_3e4a928b8a_b.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=875&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/5668/original/6028200931_3e4a928b8a_b.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=875&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/5668/original/6028200931_3e4a928b8a_b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1100&fit=crop&dpr=1 754w, https://images.theconversation.com/files/5668/original/6028200931_3e4a928b8a_b.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1100&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/5668/original/6028200931_3e4a928b8a_b.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1100&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><span class="source">microraptor/Flickr</span></span>
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<p>Of course, Woolworths and Coles are merely engaging in standard business practices. The $25-billion alcohol market in Australia is the focus of increasing competition, and these two retailers are already dominante that market. </p>
<p>Despite the rhetoric of responsibility and community-mindedness, the companies are focussed on maximising their profits. That’s why it’s necessary for governments to deal with the issue of alcohol price.</p>
<h2>Regulatory options</h2>
<p>A smarter approach to alcohol taxation has been recommended for both economic and public health reasons by recent government reviews. This measure has also been shown to be the <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1360-0443.2009.02708.x/abstract">most cost-effective intervention available to reduce alcohol-related harm in Australia</a>. </p>
<p>But despite these evidence-based policy suggestions, the Federal government has taken alcohol tax reform off the table as a policy option. </p>
<p>Alternatively, governments could impose a minimum price per standard drink for alcohol, cutting down the harm associated with discounting practices, such as those currently being undertaken by Coles and Woolworths.</p><img src="https://counter.theconversation.com/content/4352/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Livingston receives funding from the National Health and Medical Research Council, the Foundation for Alcohol Research and Education and the Sidney Myer Fund.</span></em></p>In recent days, Woolworths and Coles have put out a flurry of media releases, each staking a claim to being the cheapest place to buy alcohol this summer. Coles have “declared war” on liquor prices and…Michael Livingston, Post-Doctoral Research Fellow at The University of New South Wales, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/32822011-09-19T20:40:37Z2011-09-19T20:40:37ZLast drinks: regulating alcohol to prevent non-communicable diseases<figure><img src="https://images.theconversation.com/files/3696/original/3401533198_f7a75f760f_o.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Focussing on 'harmful' alcohol use means attention is diverted from reducing alcohol intake across the population.</span> <span class="attribution"><span class="source">Visit Greenwich</span></span></figcaption></figure><p><strong><em><a href="https://theconversation.com/topics/non-communicable-diseases">Non-communicable diseases</a> – Paula O'Brien looks at the what <a href="http://www.thelancet.com/journals/lancet/issue/current">The Lancet</a> NCD Action Group and the NCD Alliance name as one of the [priority interventions](http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(\11)60393-0/fulltext) for mitigating the impact of NCDs: reduction in hazardous alcohol intake.</em></strong></p>
<p>The Australian government has taken a tough stance against the tobacco industry and its deadly products. But despite the known harms of alcohol, it’s been slow to confront the nation’s drinking habit.</p>
<p>The government has a bill before Parliament mandating plain packaging of tobacco products as the latest of a series of steps to control tobacco consumption.</p>
<p>It has taken this action because tobacco is recognised as one of the leading causes of preventable death. </p>
<h2>What about alcohol?</h2>
<p>Like tobacco, alcohol is also a key risk factor for non-communicable diseases (NCDs), such as cardiovascular disease, cancer, diabetes and chronic lung disease. </p>
<p>What’s more, alcohol is the cause of many injuries and mental disorders, as well as social costs such as absenteeism from work and property damage. </p>
<p>In Australia alone, the<a href="http://www.aerf.com.au/Harm_to_Others_Full_Report_with-errata.pdf"> total annual cost of alcohol misuse</a> is estimated at $36 billion. </p>
<p>Yet, the government has done very little to deal with alcohol as a cause of disease and injury. </p>
<p>So what should it be doing? </p>
<p>This is an important question, as Australia and other countries gather this week at the <a href="http://www.un.org/en/ga/president/65/issues/ncdiseases.shtml">United Nations in New York</a> to decide what steps they need to take to prevent and control the four non-communicable diseases. </p>
<p>Countries have been moved to make this global effort because <a href="http://www.who.int/nmh/publications/ncd_report2010/en/">68% of all deaths in 2008</a> were due to one of these four non-communicable diseases.</p>
<p>The draft declaration for the UN meeting states tackling the <a href="http://www.who.int/nmh/events/un_ncd_summit2011/en/">“harmful use of alcohol” must be a priority</a>.</p>
<p>But talking about “harmful” alcohol consumption might throw Australia off course in its efforts to address alcohol as a risk factor for non-communicable diseases. </p>
<p>First, it suggests some alcohol use is <em>not</em> harmful even though there’s evidence this isn’t correct. </p>
<p><a href="http://www.cancer.org.au/File/PolicyPublications/Position_statements/CCA_Alcohol_and_cancer_position_statement_final_May11.pdf">Cancer Council Australia maintains</a> “any level of alcohol consumption increases the risk of developing an alcohol-related cancer; the level of risk increases in line with the level of consumption.” </p>
<p>If we accept this assessment of alcohol’s impact, it may mean we start to take a tougher approach to regulating alcohol. </p>
<p>We might start to think about alcohol as being much more similar to tobacco – in terms of its inherent potential to cause harm – than the alcohol industry would like us to believe. </p>
<p>Second, the notion of harmful alcohol use suggests that Australia should introduce programs focussing on people who drink in a harmful way, such as binge drinkers or alcoholics. </p>
<p>Programs giving attention to these sub-groups are important, but just as important are efforts to bring down the level of alcohol consumption across the whole population. </p>
<p>This is a challenging idea for many in a country like Australia, where food and alcohol go hand-in-hand at most social gatherings. And where people who abstain or who drink very little are often seen as “wowsers”. </p>
<h2>Possible measures</h2>
<p>If the real goal is to reduce alcohol consumption, then Australia should act to better regulate alcohol in three respects: pricing, <a href="http://theconversation.com/cheers-to-health-warning-labels-for-alcoholic-drinks-2891">warnings</a>, and retailing. </p>
<p>These, and other areas for action, were identified by the <a href="http://www.preventativehealth.org.au/">National Preventative Health Taskforce</a> as the way to <a href="http://www.preventativehealth.org.au/internet/preventativehealth/publishing.nsf/Content/AEC223A781D64FF0CA2575FD00075DD0/$File/nphs-overview.pdf">create “a safer drinking culture for Australia”</a>.</p>
<p>The pricing of alcohol clearly affects consumption patterns. When the <a href="http://www.preventativehealth.org.au/internet/preventativehealth/publishing.nsf/Content/AEC223A781D64FF0CA2575FD00075DD0/$File/nphs-overview.pdf">Northern Territory imposed a levy on cask wine</a> in the 1990s, quarterly per capita consumption of cask wine per person aged 15 years and over fell from 0.73 litres to 0.49 litres. </p>
<p>The tax system can be used to price alcohol to change the way we drink but Australia’s current taxation regime for alcoholic products is both complicated and flawed. </p>
<p>The system needs to be reformed to include: a minimum price for all alcoholic products (to prevent bargain basement discounting by retailers) and a tax based on volume of alcohol (so that high-alcohol products like wine don’t cost substantially less than low-alcohol beers). </p>
<p><a href="http://theconversation.com/cheers-to-health-warning-labels-for-alcoholic-drinks-2891">Warnings are not currently required</a> on alcoholic beverage containers or packaging in Australia. Alcohol is also largely exempt from basic nutrition and ingredient labelling requirements that apply to other foods. </p>
<p>Text and picture warnings, tested for their impact and rotated on a regular basis so consumers don’t become immune to their messages, can shape people’s knowledge, awareness, use and perceptions about alcohol. </p>
<p>The government is considering whether to introduce this style of mandatory warning regime. It should take this step and not opt for industry self-regulation. </p>
<p>But it’s not just the Federal government that has a role to play in reducing Australians’ alcohol consumption. </p>
<p>State governments are responsible for liquor licensing laws that regulate retailers of alcohol, such as bars, pubs, and cafes. </p>
<p>There are problems with under-enforcement of these laws in some states and territories. And many licensees are not meeting their obligations under the laws, such as not to serve persons who are intoxicated, because there are no real consequences for failing to comply. </p>
<p>Another problem is that previous changes to these laws have seen a proliferation in the number of licensed venues in many states. </p>
<p>In Victoria, this change was said to promise a more sophisticated, European-style drinking culture. </p>
<p>Rather, it’s now understood that increased availability of alcohol – more venues, longer opening hours – is connected with more alcohol-related problems. </p>
<h2>Leading the way</h2>
<p>Australia should make changes to the regulation of alcohol – in pricing, labelling and retailing – as a way of tackling at least this primary risk factor for non-communicable diseases. </p>
<p>And as a wealthy country, it should also look at what it can contribute to international efforts to combat non-communicable diseases – the greatest burden of deaths from non-communicable diseases is felt in poor- and middle-income countries. </p>
<p>Providing technical and financial assistance to such countries is one way to assist. At the very least, Australia should not stand in the way of evidence-based public health measures other countries want to introduce. </p>
<p>The United Nations meeting on non-communicable diseases this week will hopefully give Australia a push to take more decisive and effective action to deal with alcohol as a major cause of non-communicable diseases and other health problems.</p>
<p><strong><em>This is the second part of our <a href="https://theconversation.com/topics/non-communicable-diseases">non-communicable diseases</a> series. To read the other instalments, follow the links here:</em></strong></p>
<ul>
<li><p><strong>Part One: Sir George Alleyne discusses <a href="http://theconversation.com/we-need-a-new-paradigm-to-stop-non-communicable-diseases-3422">why we need a new paradigm to tackle NCDs</a></strong></p></li>
<li><p><strong>Part Three: <a href="http://theconversation.com/stemming-the-obesity-epidemic-requires-courageous-population-level-action-3412">Stopping the obesity epidemic will require action on the population-level</a></strong></p></li>
<li><p><strong>Part Four: <a href="http://theconversation.com/non-communicable-diseases-come-to-the-united-nations-3480">The results of the UN High-Level Meeting on Non-Communicable Diseases on New York September 19-20</a></strong></p></li>
<li><p><strong>Part Five: <a href="http://theconversation.com/tobaccos-mad-men-threaten-public-health-3450">How plain packaging works to reduce smoking – one of the biggest causes of non-communicable diseases</a></strong></p></li>
<li><p><strong>Part Six: <a href="http://theconversation.com/blueprint-for-making-medicines-more-affordable-for-everyone-3503">Blueprint for making medicines more affordable for everyone</a></strong></p></li>
<li><p><strong>Part Seven: <a href="http://theconversation.com/action-on-salt-will-mean-longer-healthier-lives-3443">Action on salt will mean longer, healthier lives</a></strong> - </p></li>
<li><p><strong>Part Eight: <a href="http://theconversation.com/death-by-suburban-sprawl-better-urban-planning-will-combat-sedentary-lifestyles-3395">Death by suburban sprawl: better urban planning will combat sedentary lifestyles</a></strong></p></li>
<li><p><strong>Part Nine: <a href="http://theconversation.com/where-we-come-from-determines-how-we-fare-the-fetal-origins-of-adult-disease-3581">Where we come from determines how we fare – the fetal origins of adult disease</a></strong></p></li>
<li><p><strong>Part Ten: <a href="http://theconversation.com/social-inclusion-brings-respect-and-better-health-sri-lankan-elders-3414">Social inclusion brings respect and better health Sri Lankan elders</a></strong></p></li>
</ul><img src="https://counter.theconversation.com/content/3282/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Paula O'Brien does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Non-communicable diseases – Paula O'Brien looks at the what The Lancet NCD Action Group and the NCD Alliance name as one of the [priority interventions](http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(\11)60393-0/fulltext…Paula O'Brien, Senior Lecturer in Faculty of Law, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.