Alcopop Tax Essay

1624 WordsApr 22, 20137 Pages
On the 28th April 2008 the government introduced a 70% tax increase on all Ready-To-Drink spirit mixes in an attempt to ‘close an existing loophole on the excise on alcopops' as stated by federal Health Minister Nicola Raxon. This was the sub-text behind a move that was aiming to crackdown on excessive alcohol consumption or ‘binge-drinking’ and the harm it was causing, especially to young people, who for the study purposes we will say are aged between 12-25 years old. The RTD’s were targeted due to their popularity amongst consumers of alcohol between these ages. With some RTDs containing around 5% alcohol content and having a sweet taste, people constantly over consumed without realizing how drunk they were becoming. So the government saw fit to crack down on the RTD market. This notion that aimed to make revenue of $1.6 billion was eventually turned down by the senate but not before raising serious questions about the true effectiveness of the tax increase. Effects On RTD Markets For the purpose of this essay assume a RTD is any pre-mixed beverage including spirits spirit-based RTD’S, cider, fruit-flavoured wines and fruit flavoured beers. As stated above the government aimed to crack down on excessive alcohol consumption, which is better known as binge drinking. Binge drinking is defined by the Australian Institute of Health and Welfare as either excessive consumption on a single occasion or a prolonged period of drinking and deemed as being “high risk” drinking. For Price increase of Graphs Assume: RTD cans are 350mL, contain 5% alcohol and cost $5 before tax. Price Increase for Alcohol was 39.36 > 66.67 per litre of alcohol Increase of $27.31 per litre of alcohol and therefore .350 x 27.31 = $9.56 if RTD was 100% alcohol However only 5% alcohol so increase of 0.05 x 9.56 = $0.48 and an approximate 10% increase in Price of RTDs Following any simple

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