Alcohol taxation: A system of taxing wine according to its alcohol content has been recommended.
Alcohol taxation: A system of taxing wine according to its alcohol content has been recommended. Photo: Jessica Shapiro

Dan Harrison

Taxing wine by its alcohol content would increase annual revenue by $1.3 billion, reduce alcohol consumption by 1.3 per cent and save $820 million in health care costs, according to modelling published in the Medical Journal of Australia.

Both the National Preventative Health Taskforce and the Henry tax review recommended the wine equalisation tax - under which wine is taxed by value - be replaced by a system of taxing wine according to its alcohol content, in the same way that beer and spirits are taxed.

Under the current arrangements, which the Henry review called ''incoherent,'' excise per standard drink of fortified wine is as low as 10¢, while for spirits or premixed drinks it is more than eight times as much.

Researchers modelled the impact of four changes to alcohol taxation, and concluded that taxing wine on volume was the most politically feasible, despite other scenarios raising more revenue and producing greater reductions in alcohol-related harm. A spokesman for Treasurer Joe Hockey said the Coalition had ''no current plans to change alcohol taxation''.

''The government will conduct a white paper process for real tax reform that will lay down a new tax agenda which will be put to the Australian people for their approval at the subsequent election,'' the spokesman said.

Leading up to its 2011 tax forum, the then Labor government committed not to change alcohol tax in the immediate future, citing a wine glut and industry restructuring.

But Greens Senator Richard Di Natale said an overhaul of alcohol taxation was overdue, because under the current system some wine was cheaper than bottled water.

''We've got a system that's a dog's breakfast - it's bad for the industry and it's bad for people's health,'' he said.

Senator Di Natale said the current system under which wine is taxed on value encouraged the production of high volume, low quality products, which had harmed Australia's international reputation.

Winemakers' Federation of Australia chief executive Paul Evans said the federation did not support any tax increase, because it would harm the industry and would not be effective in reducing alcohol abuse. He said a tax increase would penalise the vast majority of responsible drinkers, but there was evidence risky drinkers were not sensitive to price rises.

But some wineries, including Treasury Wine Estates (which owns Penfolds and Wolf Blass), and Pernod Ricard (which owns Jacob's Creek) have previously called for wine to be taxed on alcohol content.