New WHO report on alcohol pricing: Europe ignores cost-effective ways to lower health risks
According to the new WHO/Europe report, “Alcohol pricing in the WHO European Region”, increasing the prices that consumers pay for alcohol is one of the most cost-effective tools available for policy-makers looking to reduce alcohol consumption and associated harm.
Well-chosen pricing policies can help countries not only lower alcohol consumption and associated health risks, but also benefit economies. While every country in the WHO European Region has some form of pricing regulation in place on alcohol markets, these existing measures are often poorly designed and therefore ineffective, concludes the new WHO/Europe report.
Alcohol is one of the leading factors for years lost due to ill health, disability or early death in the Region, which also has the highest level of alcohol consumption in the world. This burden falls disproportionately on people of working age. Alcohol is attributed to every fourth death in people aged 25–29 and ranked as the leading risk factor in the Region for people aged 15–49 years. This is not only an urgent health issue, but also a factor that restrains economic development. Alcohol places a further financial burden on societies across Europe through its impact on health care and criminal justice services which often dwarfs the revenue raised through alcohol taxation.
The report, “Alcohol pricing in the WHO European Region”, summarizes the current evidence base on monetary policies aimed at reducing alcohol consumption and describes the most effective ones for policy-makers to consider.
Alcohol pricing policies can save lives and money
Given that overall alcohol consumption levels in the Region will likely remain close to current levels at least over the next decade, the Member States still have several high-potential regulation options before them. According to the report, current systems of pricing across the Region vary greatly and are poorly aligned with available evidence.
Tax is the primary mechanism through which governments influence alcohol prices. However, not all taxation policies are equal in their impacts on health. Today, countries of the Region usually try to strike a balance between the three following tax options on the basis of:
- the alcohol content of the product (specific taxation);
- the overall product volume (unitary taxation); or
- the price of the product (ad valorem taxation).
As it is the alcohol content of a product which damages health, the levying of alcohol taxes on a specific basis is likely to have the greatest beneficial impact on health. Higher rates of taxation on stronger products which are more closely associated with intoxication, and products with low costs of production, may also contribute to a healthy system of alcohol tax.
It is also crucial to regularly adjust alcohol taxes for the current inflation rates of a country, to ensure that products containing alcohol are priced at the same level and to prevent them from becoming cheaper relative to other consumer goods over time. Such a system would be more effective in comparison to the existing, hybrid systems that are being used in the countries of the Region.
Heavy drinkers: confronting health inequalities
The WHO report advises that tax rates should generally be similar for different types of alcohol (e.g. beer, wine and spirits) because a lower rate on some products is likely to encourage heavier drinkers to consume larger volumes of those products. According to the report, pricing policies which effectively target the products consumed by heavy drinkers should be taken into consideration as they are the most effective at reducing alcohol harm.
The burden of harm is particularly concentrated in heavier drinkers from lower socioeconomic groups who tend to gravitate towards the cheapest available forms of alcohol. Increasing tax rates on the cheapest products is one of the most effective options available for those countries of the Region where alcohol-related health inequalities remain a serious issue. Fortunately, the pricing policies which are most effective at reducing consumption are also the most effective at reducing health inequalities, making the implementation of these policies even more beneficial.
Another approach that is likely to reduce both alcohol consumption and health inequalities is minimum unit pricing (MUP). This measure sets a floor price for alcoholic products and can be used as an effective complement to taxation. There is a robust evidence base supporting the high effectiveness of MUPs in reducing alcohol consumption and harm, particularly among the heaviest drinkers.
The new WHO alcohol pricing report demonstrates that monetary policies can be efficient and benefit people’s health at the same time. Arguments, that state that any policy that reduces alcohol consumption may harm the economy and lead to job losses, are not consistent with the current evidence. Alcohol consumption itself has negative effects on economic productivity. Policy-makers across the Region already have everything they need to break this trend.
Alcohol pricing in the WHO European Region update report (2020)
