By Andy Young
The Winemakers Federation of Australia (WFA) has labelled a study by Monash University into the impact of increasing wine taxation on at-risk consumers as "poor" and "not credible".
The Study, 'Are Alcohol Taxation and Pricing Policies Regressive? Product-Level Effects of a Specific Tax and a Minimum Unit Price for Alcohol', was conducted by Brian Vandenberg and Anurag Sharma, and claimed that increasing the cost of the cheapest alcohol could lead to a reduction of consumption by low-income wine consumers.
But WFA chief executive Paul Evans hit back, saying: “The study is poor in its method and its outcomes are not credible.
“The study calls for a minimum floor price on alcohol – a notion already discredited by the former Australian National Preventative Health Agency – or an increase in wine taxes and it claims these will reduce consumption by at-risk or heavy drinkers,” he said.
“But the study has two critical failings.
“One. Cross price elasticities of demand between alcohol categories (eg beer, wine, spirits) are not included in its modelling of what happens when taxes are raised. The report therefore has very little credibility in predicting what the subsequent consumption behaviour will be. For example, if you increase the price of lower-cost wine, how much will budget beer sales increase? The report cannot answer this.
"And two. The study also assumes a 100 per cent seamless pass-on of any increase in wine tax to the consumer. This is a nonsense assumption. Given the retail liquor duopoly that exists in Australia, it’s more likely any increases in wine tax will have to be absorbed by the wine producer who is already doing it tough.
“Unfortunately the report has been used by the public health lobby to whip up media stories demanding an increase in wine taxes based on deeply flawed and narrow thinking.
“The claims by the public health lobby ignores the fact that ABS data confirms Australia is moving towards a more moderate drinking culture and Australians are no longer among the world’s heaviest consumers. We are making important headway."
Evans went on to say that a tax increase would simply punish the majority of responsible consumers as well as winemakers. He added that making wine more expensive would simply see people move to different types of alcohol or illicit drugs.
He added: “The Winemakers’ Federation of Australia will continue to strongly advocate for differential tax rates for wine, beer and spirits which reflects the significant differences that exist between the wine other alcohol sectors.
“Wine should and must continue to be taxed within the existing WET legislative framework and not an excise-based approach as is the case for beer and spirits. The Federation does not have a policy on how the WET tax should be calculated.”