“Alcopop” tax loophole to be closed

Posted by James Ferre on 24th November 2008

A loophole in the tax on RTD (ready to drink) alcohol products is to be cut off by the Federal Government, according to reports.

The RTD or ‘alcopop’ tax was introduced in May as concerns about binge drinking escalated. Since then Independent Distillers has produced a product called ‘Bolt’, which has exploited a loophole in the new tax arrangements by using the alcohol from beer to create a so-called ‘malternative’. The product tastes very similar to many alcopops on the markets yet sells for up to $25/carton cheaper.

Independent Distillers reported at the time of launching ‘Bolt’ that the drink was being produced to highlight the anomalies in the system. Diageo is also anticipated to import their own ‘malternative’ in coming weeks.

Alcopops

By using the traditional beer method and then taking out the beer taste and adding sugar and flavours, alcohol companies can reduce the tax excise rate from $68.54/litre for traditional alcopops to just $40.46/litre of alcohol, according to The Sunday Age.

The paper reports that the Government is likely to pursue tightening of the definition of beer to limit the ability of companies to exploit the differences in the tax excise on different variations on alcohol.

Federal Health Minister Nicola Roxon told Channel Nine that the Health Department, Treasury and the Tax Office were looking into ways to block the loophole. “We take a very dim view of manufacturers trying to find another loophole,” she said.

However, Ms Roxon believes that the measure is having the desired impact. “What I think it shows is our measure is working,” she claimed. “It is hurting those industries, but what it’s doing is improving the chances of young people drinking more sensibly.”