Government springs surprise alcohol tax

By KEVIN TAYLOR and AUDREY YOUNG

A late-night law change increasing the tax on spirits aimed at cutting binge-drinking by teenagers will also increase the cost of fortified wines.

Parliament went into extraordinary urgency last night to push through legislation which raises the price of light spirits.

The increase in alcohol excise duty covers all alcoholic beverages containing between 14 and 23 per cent alcohol by volume. It was due to come into effect from midnight.

The Government said it would raise $18 million from the move and justified it on the social grounds that it would reduce alcohol consumption by young people.

Associate Health and Acting Customs Minister Jim Anderton, who introduced the bill, said the products were "very cheap light spirits often drunk by young people".

"It is well known that most young people make their alcohol purchasing decisions based on the amount of alcohol they can get for their money, or, put another way, the amount of bang they can get for their buck."

The excise will mean a 750ml bottle of affected alcohol will rise by $4.45 and an 1125ml bottle by $6.65.

Liquor retailers said the most popular brands for teens were Kristov 62 vodka, Kentucky Gold bourbon, Mad Jacks Rum and the Millstone products of vodka, gin and whisky, all typically selling for around $11, although they can go as low as $7.95. So-called alco-pops, which generally contain about 5 per cent alcohol, are unaffected.

Some liquor stores told the Herald they did not stock cheap spirits to avoid the problems with young teens.

National MP Lockwood Smith said some of New Zealand's finest table wines would be hit as they had more than 14 per cent alcohol.

He said the bill was "crass stupidity" and called it a tax grab. A spokesman for Mr Anderton confirmed such wines would be affected.

It could add about $1.80 to the cost of a bottle.

Mr Anderton said recent surveys had shown an increase in the levels of heavy drinking among young people.

"This is an important piece of legislation that will address a serious challenge being faced by far too many New Zealand families," he said.

It is only the second time the Labour Government has gone into extraordinary urgency since being elected in 1999.

Opposing the move, National leader Bill English said if the motive of the Government had really been concern for young New Zealanders, it would not have made such a move under late-night urgency.

It had been timed to avoid news deadlines and newspaper headlines.

It was "a total abuse of the process" and a "cynical manipulation" to exploit the vulnerability of young people.

Labour is getting support from the Green Party for the bill, which Greens co-leader Rod Donald said would take away the "financial fizz for booze barons".

He told Parliament last night that the price increase would be a deterrent to young people.

He said the bill brought an end to the "devious practice" whereby some alcohol companies watered down spirits like vodka and gin so they fell within the 23 per cent alcohol-content range and therefore qualified for a lower duty and a lower price.

"We are pleased to see an end to this very cheap, effective but unethical way of peddling vast quantities of booze - more than 1.2 million bottles a year - to teenagers."

Mr Anderton said it was necessary to apply the higher excise to all products containing between 14 and 23 per cent alcohol, including wine-based products like sherry and port.