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Alcohol Consumption

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Submitted By yeelingtee
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For many Australians, drinking alcohol is part of their social identity. Despite this, excessive alcohol is seen by many as being the most serious concern for the community, even compared to tobacco and heroin. This summary aims to determine the economic theory underpinning the taxation of alcohol and the impact of taxation on economic efficiency.

Overall, on average, per capita consumption of pure alcohol is 10.35 litres per person (ABS, 2012). From 2006 to 2011, alcohol consumption per capita for ages 15 and over in litres increased from 10.31 to 10.57 in 2006-07 and started to decrease from 10.56 to 9.99 in 2007-11 (ABS, 2012). From Figure 1, it can be concluded that Australians are slightly heavy drinkers when compared to other countries with similar cultural, social and economic profiles. AIHW (2011) reports that males and those aged between 18 and 29, and also Indigenous Australians were more likely to consume alcohol in risky quantities.

Figure 1: Alcohol consumption litres per capita among population aged 15 and over in 2009
(Source: Adapted from OECD iLibrary, 2012)

Costs of alcohol consumption affect labour, health and crime. Collins and Lapsley (2008) report that total tangible costs in Australia attributed to alcohol consumption in 2004-05 were estimated to be $10.8 million. Figure 2 shows that lost production in the workforce contributes a large portion, followed by road accidents, healthcare and crime. According to Grogan (2012), 25 drinkers were arrested for involvement in alcohol-related crime just in December 2012. Excessive consumption of alcohol leads to chronic health problems, particularly liver cirrhosis, cancer and mental illness.

Figure 2: Annual tangible costs of alcohol abuse
(Source: Adapted from: Collins and Lapsley,

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