Just like your blood alcohol level on a Saturday night, the price of wine is set to skyrocket under an increased alcohol tax.
Goon: It’s the drink of gentlemen.
No other alcohol manages to bewitch the mind and ensnare the senses like goon does. Your decision to drink the classic beverage truly is a reflection of the admirable characteristics you possess that your peers should envy. These include:
- An extensive knowledge of vinology
- Never underestimating the importance of cost-effectiveness
- Having the foresight and ingenuity to drink something that can also double as a pillow when finished.
Some people will want to be you. Some will want to be with you.
Alas, if the Turnbull Government has their way, this great time in our existence will cease to be.
During all the commotion of negative gearing and the double dissolution election of July 2, the proposed changes to Australia’s current taxation of alcohol went largely unnoticed.
Currently, under the Wine Equalisation Tax (WET) – great acronym – wine is taxed according to 29 per cent of its wholesale value, with a rebate of up to $500 000 available to wholesalers.
There is a variety of tax rates applicable to alcohol in Australia, covering 16 different excise categories – and we can’t go forgetting that flat rate 10% GST on all retail alcohol sales. Wine is particularly unique though and is taxed on a very different basis to all other alcoholic beverages.
Beer and spirits are taxed based on their alcohol content. As wine is taxed according to wholesale value, this means that the cheaper the wine, the less tax that is paid. Therefore, there is more incentive for wine producers to bulk produce cheap wine (aka goon), and when it is sold, it remains relatively cheap (yay).
Specifically, cheap wine typically attracts only $3 in tax per litre. Meanwhile, that 1L bottle of Smirnoff is attracting a monumental $80 in tax (The Australia Institute). Despite making up less than 19 per cent of the total amount of alcohol consumed in Australia, spirits make up 41 percent of tax revenue.
Due to this obvious unfairness, the Turnbull Government decided to change the current taxation, unfortunately at the expense of goon and cask wine lovers everywhere.
The WET rebate will be cut from $500 000 to $350 000 from July 1 2017, and be further cut to $290 000 the following year. This should reduce some of the distortions in the wine industry and stop some winemakers from rorting the system.
However, the Foundation of Alcohol Research and Education (FARE) has put forward that further changes are necessary in order to target Australia’s heavy consumption of alcohol and increase government funds.
Under FARE’s proposed model in the Pre-Budget Submission 2016-2017, wine would be taxed according to volume of alcohol, and an extra 10 per cent tax would be added to all current excises.
This would see domestic cask wine increase by around 235 per cent.
Obviously, there is benefit to increasing the cost of alcohol. By making the cost of alcohol simply ridiculous (which it is in Australia), there is less incentive to drink solely to ‘get drunk’. Consequently, there would be significantly less alcohol related harms.
However, from this fine wine sampler’s perspective, an increase in alcohol tax unfairly targets university students. Australia has the third most expensive alcohol in the world, yet we still rank 22nd in terms of global consumption. This perhaps suggests that more than just increasing the price needs to be done in order to curb Australia’s drinking culture.
The GST is also a regressive tax, meaning that the less income you earn, the higher proportion of your income is spent on tax. This is not great news for students.
The potential to further increase Australia’s already exorbitant alcohol prices is just another blow for Generation Y. First, they took away our ability to access the housing market. Then, the chance to complete a degree under $100 000. But, some rights are so entrenched in our society, they are inalienable from our culture and make up the human experience.
They shall never take our freedom (to drink cheap wine).
Feature image source: quickmeme.com