Governments worldwide are keeping alcohol and sugary drink taxes dangerously low, according to damning new reports from the World Health Organisation. Consequently, these harmful products remain cheap and accessible. Moreover, this failure to implement adequate taxes on alcoholic beverages and sugar-sweetened drinks is fuelling epidemics of obesity, diabetes, heart disease, cancer, and alcohol-related injuries.

The comprehensive global assessments were released this week. They reveal a troubling picture. Whilst 167 countries levy some form of tax on alcoholic beverages and 116 tax sugary drinks, these rates remain woefully inadequate. As a result, public health continues to suffer.

Alcohol and Sugary Drink Taxes Failing to Keep Pace

The figures make grim reading. For beer, excise taxes account for just 14% of the retail price globally. For spirits, it’s marginally better at 22.5%. However, sugar-sweetened carbonated beverages fare even worse. Their excise taxes represent a mere 2.4% of the price.

“Health taxes are one of the strongest tools we have for promoting health and preventing disease,” said Dr Tedros Adhanom Ghebreyesus, WHO Director-General. Furthermore, he emphasised that “by increasing taxes on products like tobacco, sugary drinks, and alcohol, governments can reduce harmful consumption and unlock funds for vital health services.”

The reports expose a critical flaw. Few countries automatically adjust their taxes for inflation. This means that as incomes rise and currencies fluctuate, harmful products become steadily more affordable. Between 2022 and 2024, sugar-sweetened beverages became more affordable in 62 countries. In contrast, they decreased in affordability in only 34 countries.

Europe’s Wine Exemption Undermines Health Goals

Particularly concerning is the finding that 25 countries exempt wine from excise taxes entirely. Most of these are in Europe. This creates a dangerous loophole. Indeed, it contradicts WHO recommendations stating all alcoholic beverages should be taxed where they aren’t banned outright.

The global alcohol tax report shows significant variation. Tax structures differ wildly between nations. Nevertheless, the overall burden remains low. The population-weighted average retail price for 330ml of the most-sold beer brand is US$2.47 at purchasing power parity. Yet only US$0.52 of this represents excise tax, a mere 21%.

Current Taxes on Sugar-Sweetened Drinks Missing the Mark

The sugar-sweetened beverage report reveals equally troubling gaps. Whilst most countries tax carbonated soft drinks, the picture is inconsistent. Almost half the countries surveyed tax unsweetened bottled water. Meanwhile, high-sugar products frequently escape taxation altogether. These include 100% fruit juices, sweetened milk drinks, and ready-to-drink coffees and teas.

This patchy coverage creates problems. Consumers simply switch to untaxed alternatives. Consequently, they don’t reduce their overall sugar intake. Additionally, only a quarter of countries account for sugar content when setting their taxes. This misses a crucial opportunity to incentivise reformulation by manufacturers.

Dr Etienne Krug, Director of WHO’s Department of Health Determinants, Promotion and Prevention, emphasised the human cost. “More affordable alcohol drives violence, injuries and disease,” he stated. “Whilst industry profits, the public often carries the health consequences and society the economic costs.”

The UK Success Story Demonstrates Effective Taxation

Evidence from countries that have implemented robust alcohol and sugary drink taxes demonstrates their effectiveness. The UK’s sugar tax was introduced in 2018. It generated £338 million in revenue in 2024 alone. Furthermore, it reduced sugar consumption significantly. It also lowered obesity rates amongst 10 and 11-year-old girls, particularly in deprived communities.

Similar success stories emerge from other nations. Research shows that appropriately designed taxes on alcoholic beverages and sugar-sweetened drinks reduce consumption. Moreover, they prevent disease onset. They also generate revenue that governments can reinvest in health services.

WHO Calls for Urgent Action on Alcohol and Sugary Drink Taxes

WHO is now calling on governments to substantially strengthen their approach. This comes through its new “3 by 35” initiative. The ambitious programme aims to increase the real prices of tobacco, alcohol, and sugary drinks by at least 50% by 2035. Specifically, this will be achieved through tax increases. As a result, these products will become progressively less affordable over time.

The reports emphasise that effective taxation requires more than simply imposing levies. Governments must ensure taxes apply uniformly across all product types within each category. In addition, they must adjust automatically for inflation and income growth. Finally, they must set rates sufficiently high to genuinely impact affordability.

How to Design Effective Taxes on Alcoholic Beverages

For alcohol, WHO recommends that excise taxes should be based on alcohol content. This is preferable to basing them on beverage type or volume alone. This approach creates incentives for consumers to choose lower-strength alternatives. Simultaneously, it encourages producers to reformulate their products.

For sugar-sweetened beverages, taxes should cover all drinks containing free sugars. However, they should exempt healthy alternatives like unsweetened water. Where administrative capacity allows, sugar-content-based taxes can drive reformulation. Manufacturers then seek to reduce their tax burden by lowering sugar levels.

Revenue Potential from Health Taxes Largely Untapped

The economic case for strengthening alcohol and sugary drink taxes is compelling. The combined global market for these beverages generates billions in corporate profit annually. Yet governments capture only a small fraction of this value through health-motivated taxation. Consequently, societies shoulder the long-term health and economic costs.

Interestingly, public support exists for stronger action. A 2022 Gallup Poll found that the majority of people surveyed supported higher taxes on alcohol and sugary beverages. This suggests governments have a mandate to act.

The WHO reports make clear that current approaches are failing. Noncommunicable diseases claim approximately 2.6 million lives annually from alcohol alone. Meanwhile, health systems face mounting financial pressure. Therefore, the case for decisive action has never been stronger. The question is whether governments will find the political will to implement the evidence-based policies. These could save lives and generate much-needed revenue for overstretched health services.

Source: dbrecoveryresources