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Taxation and Consumption of Wine

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  • Tsolakis, Dimitris

Abstract

In this article, the impact that a sales tax might have upon wine consumption and, hence, on the wine and grape growing industries, is analysed. Implications for government revenue are also considered. It is shown that the relative responsiveness of supply and demand, rather than the level in the marketing chain at which a tax is levied, determines where the tax burden finally falls. The imposition of a tax on wine might force certain sectors of the wine and grape industries to undergo a phase of adjustment. However, over the longer term, a tax would not necessarily alter the impact of other factors affecting the demand for wine. Additional taxes on wine of the form of a 10 per cent sales tax could be expected to increase government revenue from all indirect taxes by about 1 per cent.

Suggested Citation

  • Tsolakis, Dimitris, 1983. "Taxation and Consumption of Wine," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 51(02), pages 1-11, August.
    • Handle: RePEc:ags:remaae:12453
    DOI: 10.22004/ag.econ.12453
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    File URL: https://ageconsearch.umn.edu/record/12453/files/51020155.pdf
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    References listed on IDEAS

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    1. Clements, Kenneth W & Johnson, Lester W, 1983. "The Demand for Beer, Wine, and Spirits: A Systemwide Analysis," The Journal of Business, University of Chicago Press, vol. 56(3), pages 273-304, July.
    2. K.W. Clements, 1982. "Taxation of Alcohol in Australia," Economics Discussion / Working Papers 82-24, The University of Western Australia, Department of Economics.
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    Cited by:

    1. Goodhue, Rachael E. & LaFrance, Jeffrey T. & Simon, Leo K., 2009. "Wine Taxes, Production, Aging and Quality," Journal of Wine Economics, Cambridge University Press, vol. 4(1), pages 27-45, April.
    2. Goodhue, Rachael E. & LaFrance, Jeffrey T. & Simon, Leo K., 2004. "We Should Drink No Wine Before Its Time," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt3fp78216, Department of Agricultural & Resource Economics, UC Berkeley.
    3. Goodhue, Rachael E. & LaFrance, Jeffrey T. & Simon, Leo K., 2004. "We Should Drink No Wine Before Its Time," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt3fp78216, Department of Agricultural & Resource Economics, UC Berkeley.

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