Sweeping changes to alcohol tax and regulation urged on Turnbull government

Senator David Leyonhjelm during a press conference at Parliament House in Canberra on Tuesday 18 October 2016. Photo: Andrew Meares  Photo: Andrew Meares
Senator David Leyonhjelm during a press conference at Parliament House in Canberra on Tuesday 18 October 2016. Photo: Andrew Meares Photo: Andrew Meares

Drinkers would pay far less for a bottle of vodka but much more for cask wine, while booze would be available from supermarkets and corner stores, under major reforms to alcohol regulation being urged on the federal government.

Ahead of the May budget, industry and health groups are pushing for a rethink of the notoriously complex tax regime for alcohol in Australia, which sees cut-price "goon" taxed at as little as five cents a drink, but spirits taxed at more than $1.

While the Turnbull government this week focused on company tax cuts and race discrimination laws, a cross-party Senate committee chaired by Liberal Democrat David Leyonhjelm quietly proposed sweeping changes to alcohol regulation.

A single volumetric tax, set at the average rate of $36.50 a litre of alcohol, would halve the effective rate of tax on a bottle of gin or vodka - while the tax on cask wine would increase more than ten-fold.

Under the current system, consumers pay about $1.04 per drink in a bottle of spirits, $0.33 for a glass of full-strength draught beer and five cents a drink on a four-litre cask of wine (often known as "goon").

Wine is subject to an instrument called the wine equalisation tax, which applies a rate of 29 per cent on the final wholesale price, meaning expensive wine is taxed more while the cheap stuff is taxed a lot less.

Meanwhile, beer is taxed at differing rates depending on its strength and packaging.

"Alcohol taxation in Australia is anything but logical," Senator Leyonhjelm told Fairfax Media. "It's a very confused regulatory environment."

Treasury concedes the system is "complex" and at cross-purposes, but there is little appetite within government for root-and-branch reform of alcohol taxation.

The Henry Tax Review in 2009 recommended moving toward a single volumetric tax rate, which would be levied to cover the "spillover costs" of alcohol abuse on the community.

Treasury adviser Murray Crowe told the Senate inquiry there had been no modelling on how to calculate such a rate, which would be difficult because alcohol consumption would change according to prices.

"We might all drink more Grange because it would come down in price, but something else, a lower priced wine with the same amount of alcohol, might potentially go up in price," Australian Tax Office deputy commissioner Tim Dyce told the inquiry.

The Senate committee also recommended the Commonwealth and states work together to allow alcohol to be sold more widely - including at convenience stores, petrol stations and supermarkets - and that restrictions on trading hours for liquor stores be abolished.

Current rules differ from state to state: in NSW, bottle shops must close at 11pm, while in the ACT, alcohol can be purchased at supermarkets.

The changes were endorsed by all the committee's members, including Liberal senators James Paterson and Dean Smith, Labor's Sam Dastyari, NXT's Stirling Griff and One Nation's Brian Burston.

Senator Leyonhjelm said Australians were drinking more responsibly and should be treated like adults.

"The level of alcohol consumption is actually going down in Australia. There is a lot less binge drinking," he said. "There's no reason to believe that just because it's available in more locations that people will drink more."

While health groups were against liberalising the availability of alcohol, the National Alliance for Action on Alcohol and the Public Health Association of Australia told the inquiry they backed a simpler volumetric tax rate.

In its pre-budget submission, the Foundation for Alcohol Research and Education urged the government to "correct" the system, particularly the WET, which it blamed for the production of "bulk cheap alcohol" to detrimental health effects.

The industry is divided, with many winemakers benefiting from current tax arrangements. But Diageo Australia, whose spirits include Bundaberg, Smirnoff and Johnnie Walker, was in Canberra last week pushing politicians to consider the issue.

"It's overly complicated and it does need to be reformed," lobbyist Jules Norton Selzer said. He conceded it would be "quite a significant change" that would need to be phased in over 10 to 15 years.

This story Sweeping changes to alcohol tax and regulation urged on Turnbull government first appeared on The Sydney Morning Herald.