The unexpected decision by Federal Government to raise the tax on ready-to-drink, or pre-mixed spirits, by 70pc – specifically to curb teenage binge drinking – has sounded alarm bells in the wine industry.
The fear by industry organisations is that the government has adopted higher taxation as the primary means of curbing problem drinking of alcoholic beverages, which may soon include wine and beer – a position effectively confirmed by Health and Ageing Minister Nicola Roxon.
An unconfirmed report claims the Rudd administration is under pressure to increase excise on wine and beer by 300pc.
The pressure is being applied within the government itself by ministers and other members of parliament, according to lobbyists.
Wine industry representatives have strongly criticised the 70pc jump in tax on RTDs and warned of the huge economic consequences of using higher taxation on alcohol in general to deal with problem drinking.
The Australian Hotels' Association says the teenage binge drinking problem is not going to be solved by one tax initiative and that the extra revenue raised, originally estimated at $2 billion annually, should be used to fund education programs for parents and their teenagers.
But last month's Federal Budget revealed the RTD tax hike will generate $3.1b annually, none of which will be spent on measures to address binge drinking, according to RTD manufacturer Independent Distillers Australia.
It says budget papers revealed the National Binge Drinking Strategy, including advertising, early intervention and community partnerships, will be "met from within the existing resourcing of the Department of Health and Ageing".
The Distilled Spirits Industry Council says the higher tax on RTDs is misguided and will only encourage teenagers to binge on other types of alcohol.
Winemakers' Federation of Australia chief executive, Stephen Strachan, says the wine industry is very concerned at the tax move, bearing in mind that his organisation has been working behind-the-scenes with government to outline the consequences of increasing taxes on wine.
"There is no doubt that by putting up taxes on spirits there will be a shift to other alcoholic beverages," he said.
"Our position for years has been that taxes are not the solution to problem drinking and that government needs to look at the culture that applies to alcohol misuse and have a much more creative approach."
* Extract from a special report in the June edition of GrapeGrowers and Vignerons magazine.