Why it’s a good idea to make alcohol more expensive – health economist
- Loyiso Maciko
South Africa wants to introduce an excise tax on alcohol to make sure no alcoholic drink can be sold below a certain price.
The harmful use of alcohol causes approximately .
Alcohol consumption is linked to over . These include liver diseases, heart diseases and different types of cancers.
This is a significant burden on public healthcare systems around the world. Governments must bear costs related to medical treatment, road accidents and violence.
The World Health Assembly has endorsed a that gives all member states guidance on ways to reduce the harmful use of alcohol.
Worldwide, have consistently shown that taxation and pricing policies bring down alcohol consumption.
South Africa’s has proposed raising to curb excessive drinking in the country.
According to a 2018 World Health Organization report, of South African drinkers aged 15 and older engage in heavy episodic drinking.
Evidence suggests that tax increases on alcohol have contributed to reducing consumption, particularly among who are more sensitive to price changes.
Hence, there is a belief that a rise in would reduce harm caused by alcohol.
Treasury has also recommended that government look into , which sets the price floor below which no unit of alcohol should be sold. Minimum unit pricing prevents producers and retailers from absorbing some of the tax increases and reducing prices or offering large discounts.
As a public finance economist and lecturer at , the Centre for Health Economics and Decision Science, I argue that increased excise taxes and minimum unit pricing should be implemented promptly.
looks at ways to improve public health through interventions such as taxes.
Cost-effective strategies
Evidence from countries such as Canada, Scotland, Wales, Ireland and England demonstrates that excise tax is a for reducing alcohol-related harm.
found that after minimum unit pricing was adopted, alcohol-related deaths fell by about 13.4%. Hospital admissions dropped by 4.1%. The most significant reductions were among men and individuals in the most economically deprived communities.
Similarly, research published in the highlighted the impact of minimum unit pricing in Wales following the outbreak of the coronavirus pandemic in 2020. .
These examples also underscore the potential that taxes have to mitigate the harms associated with alcohol misuse.
Industry influence
Worldwide, the alcohol industry frequently lobbies lawmakers in an effort to influence taxes on their products.
In Ireland the over 360 times in one year to push back against taxation proposals and other public health measures.
Case studies from the US, the UK and Nordic countries show that the alcohol industry has successfully delayed or diluted health-focused taxes by warning of .
Industry attempts to influence policies aimed at protecting population health should be resisted.
Urgent action needed
Priceless SA has previously researched the .
One study, published in , estimated that over 50 years, taxes that raised the retail price of tobacco, alcoholic beverages and sugary beverages by 20% could result in a global gain of .
The measures proposed by Treasury should be implemented without delay. This is needed to achieve South Africa’s global health targets of 10% reduction in alcohol consumption by 2025 and .
Tax revenues should be directed at prevention programmes such as mass media campaigns. Evidence from tobacco control measures shows that these of harmful products.
, Lecturer | Health Economist, SAMRC/WITS Centre for Health Economics and Decision Science, . This article is republished from under a Creative Commons license. Read the .