Optimal Alcohol Taxes for Australia
The 2010 Australian government tax review suggested Australia move to a uniform excise tax rate for all alcoholic beverages. Here, a model is presented and calibrated that shows the optimal per litre of pure alcohol (LAL) tax rates for beer, wine, spirits, and ready-to-drink spirits are substantially different to both current alcohol tax rates and the uniform tax rate recommended by the tax review. Specifically, given an individual consumer utility model, the best estimate values of the welfare maximising LAL tax rates are: $37 for beer, $11 for wine, $50 for spirits, and $77 for ready-to-drink spirits. The variation in the optimal tax rate across beverage types flows from differences in the externality costs associated with the consumption of each beverage type, and differences in the proportion of moderate consumption and abusive consumption associated with each beverage type. In addition, it is shown that the optimal tax rates are influenced by the range of costs that are considered to be externality costs, and the relative price responsiveness of abusers and moderate consumers.
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Volume (Year): 15 (2012)
Issue (Month): 2 (February)
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Preety Srivastava & Xueyan Zhao, 2010.
"What Do the Bingers Drink? Micro-Unit Evidence on Negative Externalities and Drinker Characteristics of Alcohol Consumption by Beverage Types,"
The Economic Society of Australia, vol. 29(2), pages 229-250, June.
- Xueyan Zhao, 2010. "What Do the Bingers Drink? Micro-unit Evidence on Negative Externalities and Drinker Characteristics of Alcohol Consumption by Beverage Types," Wine Economics Research Centre Working Papers 2010-07, University of Adelaide, Wine Economics Research Centre.
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