Essay on An Economic Analysis of a Rise in Alcopops Tax

4292 Words Jun 16th, 2009 18 Pages
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
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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.
Taxation

Taxation on Ready to Drink alcoholic beverages – that is, specific taxation of alcohol products in addition to any general sales of alcohol products – is an important means by which policymakers can influence price. Anderson and Baumberg (2006) summarize the results of the international research as follows:
An increase in the price of alcohol reduces alcohol consumption, hazardous and harmful alcohol consumption… …There is strong evidence for the effectiveness of alcohol taxes in targeting young people and the harms done by alcohol.
According to the British Medical Association (2008) study, 45 per cent of all individuals who consumed alcopops frequently were not aware of the number of units of alcohol in their drinks. There would appear to be strong justification for the April 2008 increase in the Australian tax on pre-mixed drinks (alcopops) by 70 per cent.

Therefore, taxation is most direct

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