An Economic Analysis of a Rise in Alcopops Tax

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An Economic Analysis of a Rise in Alcopops Tax

Joy Gu

Contents

1. Introduction……………………………………………………………………….4

2. Government Policy and Tax……………………………………………………..4 2.1 Taxation……………………………………………………………………….4 2.2 Bans on alcohol advertising………………………………………………….5 2.3 Brief interventions for reducing hazardous alcohol consumption………...6

3. Supply and Demand……………………………………………………………...7 3.1 The Demand Curve…………………………………………………………..7 3.2 Shifts in the Demand Curve…………………………………………………7 3.3 Demand and Supply Together……………………………………………….8 3.4 The Demand of Substitute Goods…………………………………………....9

4. Elasticity………………………………………………………………………….10 4.1 Inelastic Demand……………………………………………………….……11 4.2 Elastic Demand………………………………………………………………11 4.3 Education and Negative Advertising……………………………………….13

5. Consumers, Producers and Market Efficiency………………………………..14 5.1 Consumers……………………………………………………………………14 5.2 Producer……………………………………………………………………...15 5.3 Market efficiency…………………………………………………………….16

6. Conclusion…………………………………………………………..……………18

Reference……………………………………………………………………....……19

The survey of 23,000 people found the proportion of the general population drinking alcohol daily fell slightly and the number of people abstaining from alcohol climbed from 9.3% to 10.1%. The alcohol industry seized on the survey to suggest that alcohol abuse was not getting worse. Stephen Riden, spokesman for the Distilled Spirits Industry Council of Australia, which represents alcohol manufacturers, said the study showed Australians were moderating their alcohol consumption. "We do have too many people who abuse alcohol, but the problem is not worsening as many people would believe," he said. But David Templeman, the chief executive of the Alcohol and Other Drugs Council of Australia, said he feared the survey had underestimated the scale of the alcohol problem. "Things are improving, but there's a hell of a lot more to be done," he said. "This is long-term stuff, big cultural changes must take place and that won't happen overnight, it will take 10 years." In other findings, the proportion of the population who had used any illicit drug in the previous 12 months dropped to just over 13%, down from 15.3% in the 2004 survey. 1. Introduction

Alcopop is a term describing certain flavored alcoholic beverages, and is used by advocates of tighter restrictions on alcoholic beverage sales, who argue that the beverages are especially appealing to underage drinkers. Other terms include FAB (flavored alcoholic beverage), FMB (flavored malt beverage), PPS (pre-packaged spirit or premium packaged spirits), and RTD (Ready To Drink - Aus & NZ). Feudal taxes on pre-mixed alcoholic drinks were increased by 70% under a Rudd Government plan to fund a new preventive health program and tackle binge-drinking among teenagers, particularly girls. Can the Government achieve to curb the rise in binge drinking among young people or as is it merely a revenue grab by lifting 70% on Alcopop tax? By means of the economic analyses of supply, demand, government policy & intervention, elasticity, tax, consumers, producers and market efficiency, this paper not only answered the question above, but also introduced the other effective measure to reduce the rise in drinking among young people. 2. Government Policy and Tax

The 2007 National Drug Strategy Household Survey, compiled by the Australian Institute of Health and Welfare, shows that girls aged 12 to 15 are now more than three times as the same aged boys to consume alcohol at least once a week. The survey found that 10.6% of teenage girls and 7% of teenage boys are drinking at levels regarded as having harmful long-term health affects (at least 15 standard drinks a week for females and 29 for males). Also, the survey also tells that the rise of alcohol-related violence, with more than a quarter of respondents having been verbally abused by someone under the influence of alcohol,...
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