Inflation link for alcohol, tobacco

Press, 28 July 1989, Page 1

Inflation link for alcohol, tobacco

By

PATTRICK SMELLIE

Smokers and drinkers have been given a strong- personal interest in low inflation through the Budget — taxes on th# two most heavily taxed vices will now be linked to the inflation rate. When inflation goes up, so will the price of tobacco and alcohol, at six-monthly intervals. The systems for taxing both products have been reformed, and mean immediate price increases. Examples of the impact of the new regime were given by the Minister of Finance, Mr Caygill. They included: • A jug of beer, up 10c. 9 A three-litre cask of wine, up 60c. • A 750 ml bottle of gin or vodka, up 60c. • A packet of 20 cigarettes, up 5c to 10c. For wines, beer, and tobacco, excise rates will be adjusted in line with movements in the consumers’ price index, every six months. Because the tax on spirits is at a higher rate, adjustments will not be automatic. Reform of alcohol taxes includes a move to taxation on the basis of alcoholic strength rather than drink type. On beer and wine, a rate of $l5 a litre will apply, while the rate on spirits will be $3O a litre. On tobacco, the rate will be $lOO a kilogram. For those who like to roll their own, there is a small bonus — the excise duty on cigarette papers was abolished from last evening.