Australian Alcopop Tax Axed By Single Vote

by Mary Swire, Tax-News.com, Hong Kong

19 March 2009

The long-running debate over a tax on alcopops has come to an end in Australia: the tax failed to gain approval by just one vote.

Casting the deciding vote on the issue, Australia's Family First Senator, Steve Fielding, sided with opposition leaders and refused to back the formal introduction of the tax - meaning the Rudd government will now have to withdraw the tax entirely and reimburse distillers who had been paying the additional levy.

The government imposed the 70% tax increase on pre-mixed alcoholic drinks last April in a bid to tackle binge-drinking. However, further Parliamentary approval was needed by March 19.

On March 13, debate over the issue reached court after it became clear that strong objection to the tax increase was threatening the government's attempt to gain this final seal of approval from Parliament.

Since its introduction, many opposition politicians and health experts have questioned the Rudd government's justification for the tax, claiming that it has done little to diminish the country's binge-drinking culture - Fielding in particular withdrew his initial support for the tax after a report commissioned by the Distilled Spirits Industry Council of Australia (DSICA) claimed that the tax increase had had no significant impact upon the country's binge-drinking culture.

It has been estimated that withdrawing the tax bill will cost the government around AUD300m (USD204m) in repayments.

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