New study: Alcopops tax didn’t work

There are reports a new study from the University of Queensland shows that the Alcopops tax didn’t work. According to the article:

A federally-funded study to be released today reveals the tax has not dinted the number of teenagers and young people with alcohol-related injuries.

Former prime minister Kevin Rudd slapped a 70 per cent tax increase on pre-mixed drinks – dubbed “alcopops” – in 2008 to try to curb binge drinking.

But a new University of Queensland analysis of 87,665 alcohol-related visits to hospital emergency departments over three years has found the tax made no difference.

The conclusions are hardly a surprise. We know consumers are price-sensitive, particularly young ones. So making one item more expensive doesn’t mean they drop it, instead they substitute. According to the researchers:

They’re going to find something else … it’s generally spirits.

It’s a reminder of what occurred during the US Prohibition experiment. Businesses weren’t able to sell alcohol, so they sold the ingredients for alcohol with a large sign – WARNING: If you mix these ingredients you will make alcohol. The same thing appears to have occurred with alcopops:

some bottle shops began taping bottles of soft drink or fruit juice to bottles of spirits, once the tax came in.

What’s more concerning is earlier claims that young people were substituting for more illicit substances:

A NEW phenomenon of young people ”switching” to the increasingly cheap party drug ecstasy has been fuelled by rising alcohol prices, according to drug researchers, nightclub owners and the people themselves – the nightclubbers.

The rise in alcohol prices was in part fed by federal Labor’s 2009 alcopops tax.

”It is cheaper and convenient to use pills,” said Professor Jake Najman, director of the University of Queensland’s Alcohol and Drug Research and Education Centre. ”A lot of young people are making that choice to switch between alcohol and ecstasy. Pills can be cheaper, there is no question.”

It’s a healthy reminder that what matters is promoting a culture of individual choice and responsibility. Constantly trying to game the market just creates unintended consequences, and clearly they are sometimes worse than the problem they sought to originally deal with.

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