The Royal College of Australian Physicians is calling for the tax on wine to be similar to the way beer is taxed. At present, wine is taxed on value rather than on volume and it seems that the medical people have cask wine in their sights.
They claim that this is simply "cheap grog " that underscores teenage drinking and the best way to improve public health would be to hike the price to take it out of reach or at least make it much less affordable. That would be tempting to cash strapped government because such a tax increase would deliver an extra $ 1.3 billion.
Like many such "good ideas " which seem to deliver benefits, it needs some thought to determine what other outcomes are involved. This wine cask was an Australian invention and it was delightfully simple. The wine was enclosed in a sealed bag fitted with a spigot and enclosed in a cardboard outer box. It was basically a "bulk " buy, delivering four litres rather than the 700 ml of the traditional wine bottle - and the price was often as low as ten dollars per cask.
Wine has been a fast growing Australian product and we have had amazing success overseas. Our exports are well received and wine is sold at prices that are determined by quality. Our top selling "Grange " commands a thousand dollars a bottle. The wine industry grades and blends it's product and it was inevitable that the ever growing number of vinyards would have excess amounts of wine that was less than premium quality.
The invention of the wine cask solved that problem - and enhanced wine to a new market of people in what had previously been a beer drinking country. We saw the introduction of the "Mediterranean diet " which promised good health and that saw food accompanied by a glass of red wine. The wine cask delivered a less than premium quality but very acceptable grade of wine at a very acceptable price. Beer sales have been steadily dropping and wine sales expanding. The wine cask catered for those "average " people who were not brand conscious.
This proposed tax measure would probably treble the retail price of cask wine. That raises the question of what will become of the vast surplus of the wine industry that is now converted to cask wine sales ? Obviously, we could expect an increase of off label bottled wine offered at low price because such a surplus would lead to a price war to move the product. We should have learned by the example of hiking the price of tobacco that opening a price gap between a legal product and contraband invites the underground economy to serve that market.
There is also the question of the human psyche. Cigarettes are now at ridiculous price levels and some people have quit smoking, but many simply grumble and keep puffing away. Hiking the price of wine will certainly see some people forsaking a glass of wine with their meal, but many others will continue to pay for that indulgence - and spend less on life's necessities. Perhaps less food on the family table. Perhaps the kids denied much needed new shoes.
Whenever we consider change to the status quo, it is a very good idea to apply Newton's Law. To every action, there is an equal and opposite reaction.
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