Australia’s alcohol tax system is ‘disjointed’, but our research suggests that a single tax rate is not the answer

The best word to describe Australia’s way of taxing alcoholic beverages is “incoherent”.

It was the word used by the 2010 Henry Tax Review to describe a system in which some wine is effectively confronted no alcohol taxexpensive wine is taxed heavily and cask wine lightly, beer (but not wine) is taxed by alcohol content, brandy is taxed less than other spirits, and cider is taxed differently than beer.

Industry calculations suggest cask wine is taxed as low as six cents per standard drink, mid-price wine at 26 cents, bottled beer at 56 cents, and spirits at $1.24.

And yet it is cask wine of which it is often said do the most damage.

The Henry Review recommended that all drinks containing more than a small amount of alcohol be taxed at the same rate per unit of alcohol, regardless of type. It was a recommendation supported by specialists in Australia’s tax system.

Implicit, and largely unexamined, in these recommendations is the assumption that alcohol does the same harm no matter what form it is taken.

Us new studywho links drinkers’ risky behavior to the types of alcoholic beverages they typically consume finds this not to be the case.

Damage depends on the type of drink

Using data from six waves of one Australian Recreational Drugs Surveywe find that regular strength beer and pre-mixed canned liquor are among the highest in their association with both drunk driving and dangerous, distressing, or abusive behavior.

Mid-range are medium-strength beer, cask wine, and bottled spirits and liqueurs.

At the bottom are low-strength beer and pre-mixed liquor in a bottle, which have the weakest links for risky and abusive behavior when drunk.

Risk of driving under the influence, by age and type of drink

Some relationships vary with the type of damage. While bottled wine is linked to a moderate to high likelihood of drunk driving, it is also linked to a low likelihood of dangerous, distressing, or abusive behavior.

Premixed bottled liquor is associated with a low likelihood of both drunk driving and dangerous, distressing, and abusive behavior. But when the gender of the drinkers is taken into account (so-called alcopops are typically drunk by women), we no longer consider them to be so safe.

Likelihood of dangerous, distressing or abusive behavior

Our study suggests that Australia’s arbitrary system of alcohol taxation may have done some things right. Beer, which is usually taxed higher than wine, seems to do more damage.

But it has a number of things wrong. Vatwijn appears to be significantly under-taxed in relation to the damage it does.

More broadly, our findings suggest that if alcohol is to be taxed based on the harm it causes, the tax system we put in place will need to be more complex than a single rate for each unit of alcohol, regardless of the form it comes in.