Thursday, February 26, 2004
Wine to Water? Binge Tax Catches An Unlikely Consumer
Ounce for ounce, wine and beer, thanks to their lower alcohol content, tend to be less problematic than strong liquor. Public policy can be well served by encouraging substitution from hard liquor to wine and beer.
Standard wine rarely has an alcohol content greater than 14%, as to achieve those levels, fermentation alone is insufficient: distillation or addition of higher potency alcohol is required. So, New Zealand's attempt to discourage the use of harder liquors by raising taxes on drinks above 14% alcohol, looked like a measure that would benefit wine makers and have little impact on wine drinkers. But it turns out that one surprising segment of the market had been using higher alcohol (and now more highly taxed) wine: churches. It seems that many churches used higher alcohol wine because they engage in the opposite of bingeing: the high alcohol content helps preserve wine in bottles that will not be emptied for months. The tax increase has caused some of these churches to switch to lower alcohol wine, as they can no longer afford their traditional altar tipple.