All taxes are unequal but some are more unequal than others JIM GARNER

Whether governments are justified in using taxation to achieve social policy is open to debate. However, our society seems to feel it's okay to tax certain commodities to discourage their use, and it's an amazing coincidence that the three commodities that are heavily taxed in Canada - gasoline, alcohol and tobacco - are in fact the very ones that, in the public interest, should be consumed as little as possible. And it really is coincidence. The budget last month (note: our figures below are prebudget) slapped new taxes on these pleasures, but that was for our financial, not physical, health. But let's assume that the justification for an otherwise unfair tax on certain habits is that it's in the public interest to discourage these habits. The government might then find itself embarrassed by some new ideas about consumption of alcohol, especially wine, that have been coming out lately. For instance, Lancet published 12 May this year (1: 1017, 1979) an article on the statistical associations between ischemic heart disease (IHD) and various factors, notably the consumption of wine, in 18 developed countries. Reported the authors: Alcohol consumption was very strongly negatively associated with IHD mortality in both males and females. Of the three alcohol components wine had the strongest association with IHD, its magnitude being the same as that of total alcohol. The wine effect was strong no matter what other variables were in the regression equation - in other words it was not explained away by GNP [gross national product], cigarettes or diet. The study showed, for instance, that Italy and Switzerland had IHD

mortality rates of around 3 per 1000 in men aged 55 to 64, and these countries and France had the highest per-capita wine consumption of those studied. France had an even lower 1HD mortality rate, but there is thought to be underreporting. By contrast countries with low wine consumptions had high rates of IHD mortality - 5:1000 for Sweden, 8:1000 for Canada, something over 9:1000 for the US and more than 10:1000 for Finland. A Harvard study reported in the Journal of the American Medical Association found that those who take a couple of drinks every day are less likely to die of heart dis-

ease than those who abstain. However JAMA also warns that this information needs to be treated with care; those who are told to take two drinks a day may not be able to stop at two, and the apparent benefits of moderate drinking disappear quickly with overindulgence. Exactly what causes the protective effect is not known. But the Lancet article suggests isolating it would be "almost a sacrilege"; the medicine is already in a highly palatable form. Assuming that the excess taxation of alcohol (meaning the amount by which taxes exceed the normal federal and provincial sales tax) can be justified only by so-

cial imperatives, what do we find? Precious little logic. Ontario's probably as typical a province as any and here's how alcohol taxes work there. On a 2dozen case of beer (81.8 dl) the consumer pays $7.70, of which $3.01 goes to government. On a 2-litre bottle of domestic wine the consumer pays $4.85, of which $2.41 goes to government (this includes liquor board markup. Thus beer costs the consumer 188 cents for each decilitre of pure alcohol and the taxman gets 72.9. of that, while alcohol in wine costs 202 ./dl, of which the taxman gets l00.5.t. Bearing in mind that the government distributes the wine, while brewers do their own distribution, the net government revenue per decilitre of alcohol is about the same whether in beer or wine. But taxation on liquor is far higher. A bottle of Canadian rye costs the consumer $8.85, or 317 ./dl of pure alcohol, and of this the government take is 248 ./dl alcohol. Presumably this disparity is based on the belief that beer and wine are the "drinks of moderation". It's a belief for which there's precious little foundation. But wine particularly, and possibly beer, may be beneficial in moderation, and there are those killjoys who say that the best way to make their use more moderate would be to increase the effective tax bite on them by about 100%. But please, Mr. Taxman, leave imported wines alone. With a tax on a $7.25 burgundy of 561 ./dl alcohol, the ends of social, economic or political policy are already overserved.E



All taxes are unequal but some are more unequal than others.

INEWS AND FEATURES I All taxes are unequal but some are more unequal than others JIM GARNER Whether governments are justified in using taxation to a...
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