Craig denies booze tax to pay for tax-free band

01:12, Sep 11 2014

The Conservatives plan to increase excise on alcohol, but party leader Colin Craig has rejected claims that it is to pay for its policy of a $20,000 tax-free band.

At a debate in Epsom last night, party candidate Christine Rankin let slip the policy after being asked how the party would fund a tax-free threshold. 

It is one of four key policies the Conservatives are campaigning on, which they have costed at $4 billion.

Figures from the pre-election economic and fiscal update show that excise revenue from alcohol totalled $663 million last year.

"But if you assume you're going to increase excise tax by $4 billion, that's a 600 per cent increase," ACT Epsom candidate David Seymour said.

"In other words, they would nearly double the cost of the average bottle of wine. [I'd] hate to think what that would do to a flagship New Zealand industry."

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According to Seymour's calculations, the policy, if applied to all alcohol equally, would push the price of the average bottle of wine from $15 to $27.54.

Craig today rejected the claims and said the two policies were unrelated.

"The Law Commission recommendation is that the price of cheap alcohol should go up," he said.

"Currently, our excise tax is nowhere near consistent with Australia's."

According to the Australian Taxation Office, the government takes $15.63 in excise on every case of 24 cans of full-strength beer, after another rise this year.

"We certainly would increase the price of cheap alcohol - it's ridiculous that in some cases here it's cheaper than water - but the rationale for doing it is purely and simply that it's what all the experts recommend," Craig said.

The policy was about reducing alcohol harm, he said.

"Of course it will increase government revenue, and substantially, but the reason for it is not in any way to fund a tax-free threshold," he said.

"It's simply because it's the right thing to do."

Craig said the tax-free threshold would be expensive and would have to be implemented incrementally, beginning at a $5000 band.

The party was also campaigning on reining in the number of MPs and public servants, which Craig said would significantly reduce government spending.

Stuff