By Ian Neubauer
The Henry Review — a consultation paper on the future of the tax system released by the Federal treasury this month — has recommended the introduction of a volumetric tax on alcohol.
“From an efficiency perspective, applying the same rate of tax to different types of alcoholic beverages may make the tax system more neutral in influencing consumer preferences and industrial production,” it said.
The review assessed submissions from public stakeholders that addressed the current tax regime: focusing on problems evident in existing arrangements and how to better position Australia to respond to developments over the next few decades.
Taxes on alcohol elicited a wide range of community responses. They addressed the current system in which different amounts of tax are payable on a standard drink depending on beverage type, alcohol concentration, container size, size of producer and the pre-tax price of the product.
The review found many of the submissions noted the existing structure “contains many arbitrary elements and is unnecessarily complex” and that the current arrangement “reflects compromises” between a range of often-conflicting policy objectives, including revenue raising, protectionism and public health.
It also highlighted that some submissions showed volumetric taxation would create opportunities for “new products or risky drinking patterns that could not be addressed through the tax system”.
The Federal Government will make policy changes in coming years arising from the Henry Review that will influence the future shape of Australia’s tax-transfer system.
However, the application of specific recommendations made by the review are largely uncertain and likely to be influenced by a gamut of social, political and economic factors beyond the scope of review.
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