Alcohol consumption is a major contributor to public health issues across the globe. The WHO European Region, in particular, reports the highest per capita alcohol consumption worldwide, which has devastating consequences for health, including increased rates of liver disease, cancers, road traffic accidents, and premature deaths. Governments now have a powerful tool at their disposal to mitigate these harms that is both effective and underused – alcohol taxation policies.

Alcohol Affordability and Public Health

New findings reveal that alcohol has become significantly more affordable over the past two decades, particularly in the EU. Data from the latest WHO European Region report highlights that people in the EU can now purchase up to 46% more beer, 76% more wine, and 37% more spirits compared to earlier averages. This growing affordability has a direct link to higher levels of alcohol consumption.

The data paints a stark picture:

• Wine remains the cheapest form of alcohol, costing approximately Int$0.77 per 10 grams of pure alcohol in the EU.
• Wines and spirits in many EU and neighbouring countries remain untaxed or minimally taxed, with only 28 out of 53 Member States levying any excise duty on wine.

The affordability of alcoholic beverages – largely enabled by outdated taxation policies, such as the EU Alcohol Excise Duty Directive last updated in 1992 – has significantly contributed to the rising consumption trend, particularly among young people and heavy drinkers. Left unchecked, these consumption patterns spell long-term harm for public health.

Why Alcohol Taxation Policies Are Crucial

Taxes on alcohol aren’t just financial tools; they’re public health tools proven to save lives. The WHO’s latest report suggests that increasing alcohol taxation can lead to significant declines in consumption, fewer alcohol-related deaths, and reduced public healthcare expenditure. This is especially crucial in today’s landscape, where governments face the dual challenges of tight public budgets and escalating healthcare costs.

Demystifying Alcohol Taxes

The WHO has also released a practical toolkit to support policymakers in understanding alcohol taxation. Here’s an overview of why taxation plays a pivotal role in preventing alcohol-related harm:

1. Affordability Control

By increasing taxes, governments can make alcoholic beverages less affordable over time, effectively curbing consumption levels.

2. Excise Taxes Drive Behavioural Change

Unlike general taxes, such as VAT, excise taxes are designed specifically to influence consumer behaviour. They can be levied based on the alcohol content of beverages or their retail value, allowing governments to discourage consumption of higher-strength drinks more effectively.

3. Revenue and Reinvestment

Higher taxes increase government revenues, which can then be reinvested into healthcare or community programmes. For instance, some countries use these funds to promote health education or addiction recovery services.

What Can Alcohol Taxation Policies Achieve?

The WHO’s findings show that even modest increases in alcohol taxes can lead to notable public health benefits. Simulated scenarios from Georgia, Germany, and Portugal provide a clear picture:

• A 10% increase in retail prices reduced alcohol consumption by 4.0–4.3% and mortality by up to 1.5%.
• A 10-percentage-point rise in tax shares led to consumption declines of 6.3–8.5% and mortality reductions of up to 2.5%.

These policies don’t just save lives; they actively reduce the burden on public services and economic systems by lowering alcohol-related healthcare costs.

Success Stories from Leading Countries

Several countries provide real-world examples of how to use alcohol taxation successfully. For instance:

• Lithuania introduced a significant hike in alcohol excise taxes in 2017, leading to a 7% decrease in recorded per capita alcohol consumption. Despite this, the country saw a corresponding 27% increase in revenue from alcohol taxation.
• Nordic countries, such as Finland, Iceland, and Norway, operate strong state-run alcohol monopolies that regulate prices and access. These policies have not only kept prices high but also contributed to lower levels of alcohol harm.

These examples highlight the reality that with political will and strategic taxation policies, governments can optimise prevention efforts while maintaining public support.

The Opportunity for Change

Despite mounting evidence and international commitments, including the WHO Global Alcohol Action Plan 2022–2030, policy change regarding alcohol taxation has been slow. For example, most EU countries continue to levy minimal taxes on wine, prioritising economic interests over public health.

Furthermore, only 9 member states currently employ mechanisms to automatically adjust taxes for inflation. Without these automatic increases, the real price of alcohol decreases over time, further fuelling affordability and overconsumption.

A Policy That Pays for Itself

WHO’s Regional Adviser for Alcohol, Dr Carina Ferreira-Borges, describes alcohol taxation as a “best buy” for noncommunicable disease prevention and a lever that balances public health and economic goals. When implemented correctly, alcohol taxes not only reduce consumption and improve health outcomes but also offer essential financial returns through increased tax revenue. This dual benefit makes alcohol taxation an unparalleled policy solution for governments looking to adopt cost-effective prevention strategies.

Source: dbrecoveryresources