Tax aimed at young hits elderly

A new tax aimed at cutting young people's alcohol intake has accidentally halved the volume of sherry their grandparents are drinking.

Young people have carried on drinking more spirits and spirit-based "alcopops" despite the new tax, which added $4.45 to the price of a 750ml bottle of low-strength vodka in May 2003.

But many older people appear to have given up their traditional pre-dinner tipple. Consumption of fortified wine - sherry and port - has dropped from an average of 460ml a year to just 265ml per person.

The tax lowered the level at which the highest rate of excise duty chips in from 23 per cent to 14 per cent. Sherry was never a target of the tax, but was caught in its net because its alcohol content is between 14 and 23 per cent.

Statistics NZ figures released yesterday by Government MP Matt Robson show the tax succeeded in slashing consumption of spirits in the target band by 60 per cent between 2002 and 2004.

But consumption of true spirits (above 23 per cent alcohol) rose by 12 per cent, and spirit-based drinks with under 14 per cent alcohol, including ready-mixed "alcopops" which are popular with young drinkers, jumped by 29 per cent.

New Zealand Winegrowers chief executive Philip Gregan said the tax change almost exactly halved domestic sales of New Zealand-made sherry in the past two years.

"It's certainly had a huge impact on elderly people," he said.

Beer, Wine and Spirits Council head Nicki Stewart said young people were never the major consumers in the 14 to 23 per cent alcohol category.

"They were the elderly," she said. "I had a number of rest homes ring me after the tax came in."

But the New Zealand Drug Foundation, which plans to launch a campaign today for even higher alcohol taxes, said the tax was a success.

"The target was the lighter spirits with 14 to 23 per cent alcohol, and they have come down," said the foundation's director, Ross Bell.

"Unfortunately the consequence of the tax was driving consumers to other products. Ideally it drives people to a lower-alcohol product, but you have a lot of factors at play.

"The tax did what it needed to do, but at the same time what's been happening in New Zealand was a general liberalisation around drink, including lowering the drinking age, increasing the number of premises where you can purchase alcohol, Sunday sales and sales of beer and wine in supermarkets."

The latest figures confirm a long-term decline in beer drinking, down from an average of 79.1 litres a year for every man, woman and child in 2002 to 76.6 litres last year.

But the average New Zealander now drinks just over 20 litres of wine a year, compared with 18 litres two years ago.

The ban on smoking in public bars may also have hastened a decline in smoking - from an average 709 cigarettes per person in 2002 to just 568 last year.