The article: http://www.ausfoodnews.com.au/2008/11/24/alcopop-tax-loophole-to-be-closed.html
This article is about the Australian government catching alcopop companies finding loopholes in paying excise taxes. Excise taxes have been imposed on alcopop products in the hopes of trying to reduce alcohol consumption. Independent Distillers, one of Australia's alcopop companies, found a way out of the tax, which is making an alternative drink with the taste being very similar to alcopop. They strip the beer taste, leaving the alcohol in which they mix with fruit juices and other flavours. This alcoholic drink became known as 'Bolt'. This drink only has a $39.40/litre excise tax, whereas the regular alcopop tax is $66.70/litre. The Federal Government found out about this, and is now banning the further production of Bolt. Independent Distillers, however, still denies that this was not a form of a loophole.
This article connects to textbook in a sense that it explains the concept of excise taxes. Excise taxes, in the textbook, is explained as a tax levied by government on the suppliers of certain products. This tax only affects the suppliers and not the customers, and is usually a source of government revenue. The alcoholic products, such as alcopop, have been taxed for containing alcohol, which is what caused the Independent Distillers to create this alternate drink, to avoid paying so much excise tax. From the decrease in the excise taxes, they are able to lower their prices for the consumers as well, The article is an example of what companies would be willing to do to dodge excise taxes, although eventually, the government would probably find out, and stop the loophole.
I believe that although the main reason of excise taxes is to create a greater revenue for the government, part of it is also to reduce the amount of alcohol consumption. The Independent Distillers who made the new product, 'Bolt', is making an unethical choice of creating this in order to avoid paying the full excise tax. It's understandable to see why they are doing this, in order to increase their profit, but at the same time, they're decreasing the government's revenue as well. I think this situation resulted in the government being more alert that there may be more loopholes out there. This may cause the government to create stricter regulations on suppliers, and they will be certain to keep a closer eye out for companies like this.
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- picassoingsome-thing
- I like to paint, and draw, and eat. I am proud to say that I love going to comic book and anime conventions, even if that means taking a trip from my beautiful city of Vancouver. Simple things are always the best because life is a tangled ball of yarn. I'm also an avid fan of tea, board games, and giraffes!
3 comments:
I agree with the fact that the government has the right to place excise tax on certain products. However, to put it on every product that the company manufacturers is unfair from a producers point of view for they need to make a profit too. An excise tax is suppose to get consumers to buy less of the product due to the increase in price. However, products like alcohol where excise tax will not change consumers buying habits will only become a burden. in the end, we have the consumers paying more for the excise tax than the producers as stated in the textbook on effects of excise tax. Hence I believe an efficient market system is one with minimum government involvement.
John Hui
blk. F
The government is placing excise tax in order to make revenue, but the part where theyre trying to reduce the consumption of alcohol is a bit confusing. If the excise tax is only affecting the supplier and not the customers, then it is difficult to reduce the consumption of alcohol. If consumers have alcohol as part of their meal everyday, then the suppliers raising a bit of the price would not stop them from buying it, just like cigerettes as an example. I think the company has the right to produce a new product because it benefits the consumers by having an extra choice for their beverages.
Melissa Man
Block E
The motive of any business is to make profit. Like what John said, it is right to place excise tax on certain products but not all. If the government places excise tax on each product of a manufacturing business, then were does the profit come in; it doesn't. Also, excise tax only affects the suppliers and not the consumers, so reducing alcohol consumption through these taxations mentioned in your article I do not agree on. On a side note, drinking alcohol, for some, is an addiction; even drinkers themselves can not stop their consumption, so how can a little increase in price stop them. I strongly agree with John. When you have government involvement and all they are doing is taxing to make revenue, then such market is not efficient.
K.Ip
Block F
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