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Price matters – Why the Government should reconsider its stance on raising alcohol excise tax

12 May 2010
This article was published 14 years ago. Content may no longer be relevant.

In light of the industry’s ongoing brazen attempts to seduce and recruit new generations of drinkers with pocket-money priced booze, our Government’s rejection of the Law Commission’s proposal to raise alcohol excise tax is irresponsible. Worse, it flies in the face of incontrovertible scientific evidence.

The price of alcohol has a direct effect on its consumption and on alcohol-related harms. Period. Yes the research on this is complex but it is also irrefutable. Raising the price of alcohol (via tax or the introduction of minimum pricing) reduces consumption across the board – including among heavy drinkers and young people - and reduces harms such as motor vehicle accidents, violence, sexually transmitted disease and cirrhosis. It also has a preventative effect, reducing the likelihood of young or moderate drinkers becoming heavy drinkers. Of course, the extent to which these effects occur varies in different groups and contexts, but the underlying relationship itself is undeniable.

The often heard but mischievous sound bite about ‘penalising the vast majority of responsible New Zealanders’ is nothing but cleverly constructed misinformation designed to obscure the facts. Contrary to what some opponents of an excise tax rise claim, the majority of New Zealanders who enjoy alcohol in moderation will incur only minor cost increases if the Law Commission’s proposal for a 50 percent rise in excise tax is implemented. For example, the average price of a 330ml beer would rise by just 17 cents and an $11 bottle of wine would increase by just 96 cents. In fact, moderate drinkers would in all likelihood benefit from the resulting reduction of alcohol-related costs and harms across society, a national saving estimated at $72 million annually.

Currently, all New Zealanders experience the massive costs from alcohol harms – whether it be the delay in getting treatment at an emergency department due to the flood of intoxicated patients stumbling through the doors each Friday and Saturday night, or through our tax dollars funding the front line services having to cope with this epidemic (alcohol-related issues suck up at least 18 percent of the total Police budget). In this regard, it is critical that the revenue from excise tax be used directly to fund the mitigation of alcohol related harms including enhancing prevention, treatment and rehabilitation services, rather than simply disappear into the Government’s consolidated fund. We can learn from the experience across the ditch. In 1992, the Northern Territory Government placed an additional levy of 5 cents per standard drink and used the revenue to fund a range of alcohol prevention and rehabilitation measures. Evaluation of this approach showed a significant decline in alcohol-attributable mortality.

Of course, as excise tax forms a larger proportion of the price of cheap alcohol products, any mooted increase would have greater impact on the cheapest alcohol products, products such as Big Foot, which are favoured by young drinkers, binge drinkers and harmful drinkers. But surely this is to be welcomed - isn’t the entire point of the review to reduce the harms these groups cause to themselves and others?

In 2003, our then Government raised excise tax on so-called ‘light spirits’ despite huge industry pressure, yet this resulted in a dramatic reduction in consumption. The World Health Organisation identifies raising prices as an ideal policy instrument when it comes to reducing the harms from alcohol and tobacco Our current Government clearly understands this when it comes to tobacco, yet has chosen to ignore advice from public health experts when it comes to alcohol. It is true that price does not act in isolation from a range of other influences – which is precisely why Sir Geoffrey Palmer and his team have urged the Government to adopt their recommendations as a package rather than cherry pick the least politically risky options.

The Law Commission’s final report to the Government is comprehensive and balanced, and its recommendations are grounded firmly on the evidence. Raising excise tax is no magic bullet, but as part of a balanced package of measures, it will significantly contribute towards reducing the ongoing carnage from the misuse of alcohol that currently plagues our society. Kiwis don’t need any Big Foots in Aotearoa, particularly the cheap and nasty variety.


The New Zealand Drug Foundation has launched the It’s Our Turn To Shout project in support of changes to New Zealand’s liberal liquor laws.

This is an edited version of an opinion piece published in the Dominion Post, Wednesday 12 May.





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