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Aussies want to raise taxes on wine

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The classic way the government tries to regulate alcoholic beverage consumption is through so-called “sin taxes” that raise the price of booze, thus making it harder to people–especially poor people–to drink.

Our own U.S. government does it, and so do state governments. The federal and state governments collectively generated $5.8 billion dollars in alcohol beverage rax revenues in 2009, according to the Tax Policy Center of the Brookings Institution,

That’s the price consumers pay. Wineries in addition pay a tax to the Treasury Department, depending on the alcohol content of their wine: for example, $1.57 per gallon on wines between 14%-21%.

There are few people out there, I think, who would say that no taxes at all should be raised on alcoholic beverages (maybe a few extreme libertarians or Tea Party types). The question that has plagued our government for many years is exactly where to draw the line. How much tax is too much tax?

Years ago, in the early 1990s, there were a series of measures to raise taxes on wine in California. These were largely sponsored by a loose collection of individuals and organizations  commonly referred to as “neo-prohibitionists.” Those efforts were opposed most strenuously by the Wine Institute, the San Francisco-based trade group then under the leadership of John De Luca. I don’t know who came up with the term “neo-prohibitionists,” but it was brilliant marketing, as it made the pro-tax side look like a bunch of tight-ass teatotalers led by Carrie Nation-type angry non-drinkers who hated fun, sex and dancing. Needless to say, nothing came of these tax-boosting efforts, and I can’t recall any similar threat so far in the 21st century.

Well, not here in the U.S., anyway. But Down Under, it’s a different story.  The Australian National Preventative Health Agency, an official part of the government, is set to propose “that a ‘floor price’ and new taxes be calculated as a way to make alcohol dearer,” according to news.com.au.

And the tax hike would not be a modest one. “The cheapest wine would cost $8.40 for a bottle of white or $9.60 for a red.” (The U.S. and Aussie dollars are pretty much equal in value.)

The Australian Medical Association is pushing the pro-tax plan, while the country’s hotels, retailers and wine industry trade groups are fighting back. It’s a Battle Royale and the outcome isn’t clear.

I obviously hope this tax hike doesn’t go through. Prohibitionist schemes, whether for recreational drugs or alcoholic beverages, never work. Look at this country’s own sorry experience with Prohibition in the 1920s, which gave rise to organized crime’s lucrative choke hold on booze, or to today’s strictures against marijuana, which have turned Mexico into a narco-state whose violence routinely spills over the border into our own country.

Much better, in the case of alcoholic beverages, to teach young people to drink responsibly, at the table with food and companionable company. But I guess that’s asking too much in a country whose culture still has a streak of puritanism running through it.

  1. Of course I am bias because I own vineyards, however, if we are going to attempt to restrict or de facto outlaw that which is perceived as not good for us why not a “Sin Tax” on milkshakes and hamburgers, french fries and sodas.

    Oh, and what about work, doesn’t being hunched over a desk for 25 years cause a whole host of illnesses?

  2. “The cheapest wine would cost $8.40 for a bottle of white or $9.60 for a red.”

    Why the difference?

    If anything, wouldn’t you think young people favoured white wine, as it can be sweeter and therefore more easily drinkable, and accepts “mixers” like cassis to make it even more palatable?

    And what the hell will rosé cost? Halfway between the two?

    The Sediment Blog

  3. Ha ha ha, The Province of BC makes around 1B a year on alcohol taxes and that’s one province in Canada with 4.7m people, the markup is 123% on the CIF price, we know sin taxes. 5.8B is peanuts ;)

  4. The thing with taxes is that they always go up. And where does the tax revenue go, that’s my question. I don’t think people would mind paying more if they actually knew where it was going, even more, how it is actually benefiting tax payers rather than deep pocket government agencies. Sheesh. In my opinion we would only be so lucky to have a libertarian in charge of things from time to time, to get a little break from the “fair share” rhetoric and ‘tax and spend’ culture.

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