What is the Australian government doing about alcohol addiction?

Is it appropriate for government to keep taxing tobacco and alcohol and give unwanted tax benefits / subsidies in other sectors like home loan subsidy for luxury houses?

• The cost of good quality alcohol in India is extremely high. This leads to smuggling and even worse to experimental alcohol (kachhi sharab). Every government keeps loading its deficit on tobacco and alcohol consumption and at the same time keeps giving tax sops on home loans. You get enormous amount of benefit regardless it is your first house, second or third. The higher the price of the house, more the benefits are and for longer term. Why shouldn't the government reduce tax on alcohol and tobacco and make it similar to what it is in countries like US and Singapore for example.

• Answer:

  I will answer this question in Two parts. First,let us take taxing of tobacco and alcohol In my opinion,consuming alcohol and/or tobacco is a personal and individual choice. Calling them as "basic needs" is as much subjective and judgemental as considering them as either sin or crime. Those who like them consume them, those who do not, do not.That's all to it. So, let us get this viewpoint out of our way in dealing with this question,and try to see purely from an economic stand point. Secondly, I am not buying into the reasoning adduced by many here that the Government is taxing these products because these are harmful to the health of the people. If the Government is really so concerned about the welfare of it's people and the health hazards of these products, then it should ban the production and distribution of alcohol and tobacco altogether,rather than merely taxing them at higher rates.This is not going to solve that problem. Thirdly, I do not see any point in seeking parity between the poor and the rich for the consumption of alcohol or tobacco. I would much rather demand parity, or even priority for the poor over the rich in areas like education, healthcare, infra structure or such other things rather than for consumption of alcohol or tobacco. (As a matter of fact I can make out a case why poor are more affected due to consumption of alcohol or tobacco here: The adverse effects of the heads of the family/bread winners falling into the addictive habits of drinking or smoking, and the  possible impact of such habits on their health,are bound to be far more acute on the women and children of poor households, than on the relatively rich ones. It is an economic fact,and not a moral/ethical observation, that these habits lead to the ruination of countless Indian families and keep them mired in poverty and squalor for generations together) Now coming to the main issue of higher taxation on these products, the reasons of the successive governments for resorting to this step are rooted more in sound economics than some altruism: Inelasticity of demand for these products. In other words,alcohol and tobacco are not price sensitive, and the people will continue to demand and consume these products even when their prices increase many fold due to higher taxation.It is a rudimentary economic dictum that the Governments always tax goods ( and services) which have inelastic demand more than those which have elastic demand.This is purely an economically appropriate taxation policy, which incidentally does not attract much flak also from social pressure groups. Coming to the question of tax benefits (and certainly they are by no means they are subsidies) on home loans, comparing them in this context is like comparing platinum products with peanuts. Anyway, I would refer to my following answer, where I had attempted an objective analysis of tax breaks on home loans, and the same arguments hold good here too.