Australia: Should we increase alcohol costs to fight obesity?
An unpopular idea that could make economic sense.
By Kylie Purcell, Senior Digital Journalist, Your Money
May 3, 2019
Tackling Australia’s obesity problem could be as simple as making a glass of beer or wine more expensive.
According to analysis from Deakin University, the most cost-effective way of reducing obesity levels in the country is to tax alcohol at a rate of 84 cents per standard drink.
On average, that would increase the price of beer by around 28 per cent, bottled wine by around 33 per cent and spirits by 10 per cent.
In a panel discussion on Your Money Live, Angela Vithoulkas, founder of the independent The Small Business Party, and Greg Baxter, partner at Newgate Communications, debated the facts.
While the idea of taxing alcohol further is unlikely to a popular one, Baxter argued that forcing people to pay more for their drink made economic sense.
“It’s a ‘user pays’ models essentially. If you drink those products or eat that food, you’re going to cost the health system more. So let’s make you pay for it on the way,” he said.
“I actually do think we have a drinking problem in Australia. We’re not alone here, but I think we do.”
He said that similar tax models to reduce consumption of certain products have worked in other countries.
“They’ve had a big impact on consumption, particularly in places where they have alcohol consumption problems,” he added.
But Vithoulkas argued the tax unfairly discriminated against people with less money and that other similar systems that have been introduced in Australia have had little effect.
“I couldn’t disagree more. We’re not the UK, where they seem to accept and absorb every tax that gets thrown at them. This is Australia,” said Vithoulkas.
“Noone is going to put up with that, having the alcohol tax, and it’s not going to be at 84 cents, it’s going to end up being a lot more than that,”
“If you look at the socioeconomic status of alcohol across the board, everybody, rich or poor, drinks about the same. So, if these prices do go up, it’s going to discriminate and affect the lower-class. People who are already struggling.”
“It discriminates because those who can afford it will just laugh it off. So, it’s not going to do what it’s intending to do.”
Vithoulkas also pointed to the price hike given to premade alcoholic beverages to reduce teen drinking.
“That didn’t work. It didn’t stop our younger generations from curbing their alcohol intake. So we have tried that in a way already, and we’ve already seen that it didn’t go that way.