Australian Wine, Beer May Become More Expensive

SYDNEY, Australia—An overhaul of Australia's complex alcohol tax regime being considered by the federal government would raise the price of wine and full-strength beer but, controversially, lower the price of alcopops.

A review of the national tax system headed by Treasury boss Ken Henry is believed to have recommended replacing Australia's antiquated and haphazard alcohol excise regime with a cleaner "volumetric" system based on alcohol content, Fairfax newspapers say.

Acknowledging the social and health impacts of alcohol use and abuse, the taxes would increase in accordance with the alcohol content at six key points: 3.5 percent, 5.0 percent, 7.0 percent, 10 percent, 15 percent and 22 percent.

An analysis by accounting firm KPMG for the Distilled Spirits Industry Council of Australia found the proposed incremental tax rates would lift the price of full-strength beer by about 5.0 percent. Wine prices would probably rise about 1.0 percent, and spirits, which are already heavily taxed, would remain about the same.

But, in a political sticking point, such changes could result in a drop in the price of alcopops, which have controversially been singled out by the federal government for special tax treatment after being blamed for encouraging binge drinking, particularly among young women.

The KPMG analysis estimated the price of mid-strength alcopops would fall by about 8.5 percent.

The Henry review is in Treasurer Wayne Swan's office, with a response likely in about March.