Time to do away with excise

This week, we take a different approach, and Peter gets an opportunity to have a rant on our collective behalf about a hot topic that could be easily resolved if a little common sense was brought into play. Without more ado, take it away Peter . . .

Excise on alcohol has been levied since 1868, so you would think that anyone producing alcohol in any form would be used to the tax by now. But – and it’s a big but – then increases in the excise were linked to annual consumer price index (CPI) rises. Apart from the fact that tax increases boost the CPI, which in turn boosts the excise the following year like some demonic merry go round, it’s also a nonsensical, unfair and ignorant form of taxation.

Logic dictates that the excise regime should go the way of the dinosaur and considerate drivers. But sadly it has adherents – the anti-alcohol brigade. Holier than thou, these people have decided that they know what is best for us and thus apply pressure on governments to increase the rate of excise by more than accounted for in the process described above.

I guess they have motive. Most of these organisations’ funding is derived from current alcohol taxation, so the more taxes the greater their funding.

All this in the name of stamping out binge drinking. Now, while noone in their right mind would advocate over-consumption of wine, beer or spirits, the link that alcohol health watch and others have drawn between tax increases and the reduction of harm is erroneous. Let’s look at the statistics. Rises in tax have not had any effect at all. For example, figures reveal that total wine available for sale increased by 9 per cent, or 9.3 million litres, between 2006 and 2010. Presumably even the kill-joys can work out that if there is a continual rise in alcohol available for consumption, there is more being drunk. While population increases and more liberal licensing law interpretation would account for most of this rise, the sensible majority will realise that any increase in volume is a direct result of people enjoying a drink in a responsible manner.

As excise tax is a tax on production, not consumption. It punishes the small wineries who cannot, due to competitive pressures, pass the annual increase on to their customers. This scenario also threatens jobs and export revenue.

So why is the excise levy ineffective as a consumption deterrent? Apart from what I’ve already stated, the retail sector can and does undermine the entire process through pricing and promotional policy.

This is how it works. On July 1 each year, the excise increase is included in the retail price of alcohol. The effective date for implementation is the first Monday after July 1. Monday is also the day when the promotional specials cycle begins. Along with an excise increase you also get a price ticket that reduces the price for a week. So whatever the excise increase, there will be a cheaper alternative through the ‘‘specials programme’’.

Supermarkets deny that they lose money on these deals and do not create a ‘‘loss leader’’ scenario. But make no mistake, someone has to pay, and these days it’s mostly the winemakers who have supplied the product at a discount.

Fortunately, a solution is at hand. All the politicians need to do is adopt the suggestions of several wine writers and other interested parties, as specified in submissions to the Alcohol Law Reform Bill, and replace excise with a consumption tax to be levied at the till.

So far, this sensible suggestion has fallen on deaf ears. The reason is, it would be too difficult to administer, because excise tax is based on the alcohol by volume in each category – thus wine, beer and spirits attract a different rate of tax.

As always, on ‘‘planet politician’’ they seem inured to logic, but we note that the anti-alcohol organisations are also calling for a tax on consumption. We are not anti-alcohol so it would seem that at the stroke of a pen the relevant minister could appease the two opposing sides of the alcohol debate – political Nirvana, we would have thought.

It would also be good to see politicians from across the political spectrum get one thing clear in their heads: supermarkets do not sell alcopops, which are the nasty, sticky drinks the minority of bingedrinking kids love.

Taxing sherry was never going to get young people to toe the line – and you can’t buy that at supermarkets either.

Stoneleigh Latitude Marlborough Sauvignon Blanc 2011 ($26.99)

The tight aroma is a combination of melon, warm grass, currants and tropical sweatiness.

Smooth, rich and tropical on the palate, the fruit weight and flavour gives way to a powerful grapefruit and mineral streak that races out to the finish. The upsurge in acidity towards the finish is a little jarring in what is otherwise an attractive wine.