RTD Tax Hike: The Exclusive Facts

By Andrew Starke

With RTD legislation likely to be passed by the Senate later this week, TheShout can exclusively reveal the full impact of the 70 percent excise on the industry since its inception in April last year.

A spokesperson for the Senate told TheShout that while the RTD legislation was scheduled to be debated today (Aug 12), a full parliamentary roster meant this was unlikely to occur until later in the week.

However many in Government are believed to have misgivings about the effectiveness of the tax hike in addressing binge drinking and other social problems.

A report compiled by the National Centre for Education and Training on Addiction last year predicted that drinkers would simply substitute brands to avoid paying more and suggested Australia’s alcohol taxation system was deeply flawed.

‘The impact of the RTD tax increase: 12 months on’ - a new report by research house Nielsen - supports the first point finding that “while the RTD tax change has delivered its intended objective of reducing standard drinks consumption for RTDs – it has significantly increased consumption in other categories”.

The report continued: “At the end of the three month period to July 2008, beer and spirits had increased in standard drinks compared to the same quarter of the previous year. This was quite a feat given that both categories had previously been in decline”.

However, while the introduction of the revised RTD tax in May 2008 caused the retail price of RTDs to increase dramatically, consumers have slowly returned to the category.

“By the end of the July 2008 quarter, total standard drinks had declined by 2.8 percent versus the previous year. On an annualised basis, this equalled a reduction of 412 million standard drinks. At this point, it appeared that the new tax had delivered not only a reduction in RTD consumption but also a reduction in total off-premise packaged alcohol.”

“However, by the time the tax had been in place a year, total standard drinks for off-premise packaged liquor had declined only marginally by 0.2 percent or 21 million standard drinks, while total standard drinks purchased was 9.57 billion. In value terms, off-premise packaged liquor grew by six percent – above the long term average of 4.8 percent.”

“Early indications show that as the first year effects from the tax increase ‘wash through’, standard drinks for total packaged liquor and the RTD category will both move into growth,” concluded the report.