What's the most value for money way to tackle obesity? Increase taxes on alcohol
- Written by Jaithri Ananthapavan, Senior Research Fellow, Health Economics, Deakin University
We don’t often equate the kilojoules we drink in our glass of wine or pint of beer with the weight that accumulates around our middle. But our new study shows increasing the price of alcohol is the most value for money policy option to prevent obesity in Australia.
The study, released today, shows if we increase alcohol taxes by standardising them across different types of alcohol, overall alcohol consumption would go down. This would lead to substantial reductions in the kilojoules Australians consume each day.
In 2016-17, Australians drank 186 million litres of pure alcohol – equivalent to more than nine litres for each person over the age of 15 years.
Read more: Think before you drink: alcohol's calories end up on your waistline
The health and social harms associated with drinking too much are well documented. Our research is among the first to show that policies aimed at reducing alcohol consumption would also have significant impacts on body weight.
Current taxes on alcohol
Australia’s current alcohol taxation system is complex and illogical. Most alcoholic beverages are taxed based on their alcohol content, but different rates of tax are applied to different products.
Beers have the lowest rates, and spirits and ready-to-drink beverages (such as a can of bourbon and cola) have the highest.
Wine is taxed using a different system (the wine equalisation tax) based on its final wholesale price.
Under the current system, the total price (including taxation, in 2013 prices) of a standard drink (equivalent to 10g of alcohol) varies from around A$0.65 for cask wine to A$2.79 for ready-to-drink beverages.
Proposed new tax regime
Public health groups have long advocated for reforms to the current alcohol taxation system in Australia.
Our research group modelled the impact of replacing the current system with a uniform volumetric tax, based on alcohol content.
Read more: Fifty years on, time to call it a day for cheap wine casks
We applied a tax of 84 cents per standard drink across all alcoholic beverages (beers, wines, spirits and ready-to-drink products). This is equivalent to a 10% increase to the rate currently applied to spirits.
This proposed change would have the biggest impact on the price of cask wine, increasing it by more than 120%. The price of beer will increase by 28% on average, bottled wine by around 33%, and ready-to-drink alcoholic beverages by 2.7%.
Authors: Jaithri Ananthapavan, Senior Research Fellow, Health Economics, Deakin University