Reform of the Regulation of Liquor


  • The author is grateful to John Freebairn and to the referees for their constructive and helpful suggestions.

Peter J. Lloyd, Department of Economics, University of Melbourne, Parkville, VIC 3010, Australia. Email:


This article reviews the tax bases and rates currently applied to alcoholic beverages in Australia. It then considers changes to the tax base and rates. It advocates a single volumetric base with the rate at least equal to that currently levied on spirits other than brandy. However, improved taxes on alcoholic beverages cannot eliminate the externals harms imposed by some drinkers on other persons. The guiding principle for reform of both taxes and other regulations is that they should focus on the small minority of drinkers who cause harm. Effective policy reform will require careful policy design and a commitment from politicians. Some reforms are mooted.