Brian Vandenberg1, Heng Jiang2, Michael Livingston3. 1. School of Social Sciences, Monash University, Victoria, Australia. Electronic address: Brian.Vandenberg@monash.edu. 2. Centre for Alcohol Policy Research, La Trobe University, Victoria, Australia; Melbourne School of Population and Global Health, University of Melbourne, Victoria, Australia. 3. Centre for Alcohol Policy Research, La Trobe University, Victoria, Australia.
Abstract
BACKGROUND: In 1988, the Australian government introduced a single nominal rate of tax on all beer products calculated on alcohol content. However, in 2000/01, varying nominal rates of tax were introduced for beer products according to three alcohol content levels (low-/mid-/high-strength) and container type (on-/off-premises). Little is known about the effect of the different tax policies on alcohol consumption and government revenue. METHODS: We undertake time series analysis over 1989-2016 to examine the effect of beer tax policies in two sub-periods (before/after 2000/01) on category-level beer consumption per capita and government revenue. We also test if the policy changes in 2000/01 had immediate or long-term effects on total (all beer category) consumption over 1989-2016. Data includes monthly domestic beer sales volumes by category (in litres of alcohol), monthly government revenue from beer tax (AUD$), and inflation-adjusted tax rates (AUD$ per litre of alcohol). RESULTS: Before 2000/01, the single nominal tax rate had a significant positive effect on revenue, but no significant effect on consumption. After 2000/01, the relatively higher nominal tax rates for two beer categories (mid- and high-strength off-premises) had a significant negative effect on their consumption, and a significant negative effect on revenue in one category (mid-strength off-premises). However, across the full period examined (1989-2016), the level and slope of total beer consumption was not significantly affected by the tax policy changes in 2000/01. CONCLUSION: Raising alcohol taxes has the potential to reduce consumption and increase government revenue, but has been underutilised for these public health and public finance objectives in Australia.
BACKGROUND: In 1988, the Australian government introduced a single nominal rate of tax on all beer products calculated on alcohol content. However, in 2000/01, varying nominal rates of tax were introduced for beer products according to three alcohol content levels (low-/mid-/high-strength) and container type (on-/off-premises). Little is known about the effect of the different tax policies on alcohol consumption and government revenue. METHODS: We undertake time series analysis over 1989-2016 to examine the effect of beer tax policies in two sub-periods (before/after 2000/01) on category-level beer consumption per capita and government revenue. We also test if the policy changes in 2000/01 had immediate or long-term effects on total (all beer category) consumption over 1989-2016. Data includes monthly domestic beer sales volumes by category (in litres of alcohol), monthly government revenue from beer tax (AUD$), and inflation-adjusted tax rates (AUD$ per litre of alcohol). RESULTS: Before 2000/01, the single nominal tax rate had a significant positive effect on revenue, but no significant effect on consumption. After 2000/01, the relatively higher nominal tax rates for two beer categories (mid- and high-strength off-premises) had a significant negative effect on their consumption, and a significant negative effect on revenue in one category (mid-strength off-premises). However, across the full period examined (1989-2016), the level and slope of total beer consumption was not significantly affected by the tax policy changes in 2000/01. CONCLUSION: Raising alcohol taxes has the potential to reduce consumption and increase government revenue, but has been underutilised for these public health and public finance objectives in Australia.