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Get off the (minimum) floor and hit the vino

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Scrapping or reforming the infamous wine equalisation tax could deliver a bigger boost to national health than the introduction of a minimum floor price for alcohol, according to the Federal Government’s former chief preventive health adviser.

In one of its final reports before being shut down at the end of last month, the Australian National Preventive Health Agency found little evidence on health grounds to support the establishment of a minimum floor price for alcohol.

Instead, it raised concerns that the wine equalisation tax (WET) – which is levied according value rather than alcohol volume – may actually promote drinking, and should be overhauled.

It found that the way the WET worked meant that the cheaper the wine, the less it would be taxed, irrespective of alcohol content.

“The effective preferential treatment of wine under the WET results in price distortions in the alcohol market; in particular, in favour of cheap wine,” the Agency said. “Preferential treatment of wine, particularly at the lower value end [of the market], is likely to be contributing to social and health harms.”

By comparison, it found that imposing a minimum floor price would simply add to alcohol company profits without any discernable public benefit.

“A regulated minimum price increase would lead to profit increases flowing to the private sector from the monopoly rents created,” ANPHA said. “This significantly reduces the available public benefits which could be used to further reduce or treat alcohol-related harm, or be redistributed by Government for other purposes.”

“The loss of major offsetting benefits makes it very difficult for this policy to result in net benefit to the community.”

Adrian Rollins