Alcopop Tax

Topics: Alcoholic beverage, Economics, Supply and demand Pages: 6 (1462 words) Published: September 15, 2013
Executive Summary
1. Introduction
2. Main issue
3. Key stakeholders
4. Economic theory
4.1 Opportunity cost
4.2 Subsidy
4.3 Law of demand
4.4 Cost of production
4.5 Government intervention (Taxation)
5. Solutions and Alternate Recommendations
6. Conclusion
Reference list

Executive Summary
The purpose of this report was to analyze the 'alcopops' tax with related economic theory and outline the main issue and identify the key stakeholders. Also, the report will provide solutions and alternate recommendations. This report is based on news article provided from teachers which are about 'alcopops' tax. Findings portray that alcopops are especially popular among teenagers and the imposition of the tax is not effective for young people due to they can find other sustitubes. However, the government can build a positive culture and educate young people for solving this problem.

1. Introduction
The Australian Federal Government is silently increasing the tax on pre-mixed alcohol after midnight in an attempt to reduce the consumption by teenagers among the young drinking culture. The tax has been increased by 70% and this will raise about $2billion over 4 years for the government. However many have argued that the tax increase will not have much use to reduce teenagers over consumption of alcohol and this is just a cover for the government to increase tax. In the following parts will present what the key issues have been raised and its relevant theory. Also alternative actions identified will be proposed.

2. Main issue
From 2000, there is an explosion in the sales of pre-mixed alcohol products. These products are especially popular among teenagers is because they are usually sweet, pretty, convenient and you can’t taste the alcohol. The abuse of alcohol among teenagers has caused a lot of troubles for the government. Since the explosion of pre-mixed alcohol products raise, the level of alcohol related violence has also increased. According to a survey done by The National Drug Strategy, 7% of teenage boys and 10.6% of teenage girls are drinking at a level that might cause long term health issues. Almost one out of twenty have been physically abused by someone who is under the influence of alcohol.

To tackle the young drinking culture, The Australian Federal Government has increased the tax of pre-mixed drinks which commonly known as ‘alcopops' by 70% after midnight without any noticing beforehand. The government believes teenagers are very price elastic and by increasing price, it can greatly reduce the demand among teenagers. However opposition and the pre-mixed drink producers argue that the government is only finding excuse to raise tax. They believe the increase in tax could make the problem worse as it will shift the demand from ‘’alcopops’’ to beer, wine and spirits which the alcohol contents are much higher.

3. Key stakeholders
3.1 Young people
3.1.1 Generally young people
Alcopops are especially popular among teenagers is because they are usually sweet, pretty, convenient and can’t taste the alcohol. According to Harvey (2008), the survey done by The National Drug Strategy, 7% of teenage boys and 10.6% of teenage girls are drinking at a level that might cause long term health issues. Almost one out of twenty have been physically abused by someone who is under the influence of alcohol. The imposition of raising alcopops is believed to be able to reduce the demand of alcopop of teens.

3.1.2 Young female
According to Harrison (2008), the survey discovered that girls in 12-15 consume alcohol more than three times as boys a week. It becomes a more serious problem with girls than boys. The imposition of rising alcopops tax has greater impacts to girls.

3.2 Government
The government has responsibility to provide a better living environment for its citizens and protect their young generations. That's one of the reasons the government raise the alcopop tax. Also, the imposition can...
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