Effects of changes to the taxation of beer on alcohol consumption and government revenue in Australia

Brian Vandenberg, Heng Jiang, Michael Livingston

Research output: Contribution to journalArticleResearchpeer-review

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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.

Original languageEnglish
Pages (from-to)1-7
Number of pages7
JournalInternational Journal of Drug Policy
Volume70
DOIs
Publication statusPublished - Aug 2019

Keywords

  • Alcohol
  • Australia
  • Beer
  • Taxation
  • Time series

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