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Raising Liquor Taxes Wrong Move


Raising Liquor Taxes Wrong Move

Parliament has passed under extreme urgency the Customs and Excise (Alcoholic Beverages) Amendment Bill to increase the cost of all alcohol by 2.6 percent from June 1 (in line with the movement in the consumers' price index) and to increase the rate of excise duty on drinks containing between 14 percent and 23 percent of alcohol by volume.

"The latter move is an example of bad tax policy", the executive director of the New Zealand Business Roundtable, Roger Kerr, said today.

First, the process leading to this decision did not follow the generic tax policy process (GTTP) which has been endorsed by successive governments and expert commentators. The GTTP was designed by the apolitical Richardson Committee in 1994 with a view to producing sounder tax policy decisions by exposing tax reforms to a wider and more systematic degree of consultation.

The reasons given for taking extreme urgency – to avoid buying in advance of the change – are unconvincing. The taxation of so-called light spirits was identified by the government last year as an issue and could have been subjected to the GTTP.

Secondly, the 2001 McLeod Tax Review recommended the abolition of excise taxes on the principal grounds that they were unfair, regressive and inefficient. The Review also stated that excise taxes were a blunt measure that hit both non-harmful and harmful consumption.

"The government has not rebutted the findings of the McLeod Review on these fundamental matters and its move is inconsistent with them", Mr Kerr said.


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