Countries Fail to Use Alcohol Taxation Effectively

Despite strong evidence that taxing alcohol is one of the “most effective measures to reduce consumption and address alcohol-related harms”, countries are not using this effectively, according to Ruediger Krech, the World Health Organization’s (WHO) director of health promotion.

Krech was speaking on Tuesday at the launch of a WHO manual on alcohol tax policy and administration and a report on sugar-sweetened beverage (SSB) taxes

“Alcohol is one of the few toxic and psychoactive substances that many governments permit to be sold widely in the market. However, with this permission comes responsibility and governments have a duty to regulate the market to minimise harm,” said Krech.

“Alcohol is one of the leading risk factors for non-communicable diseases, including cancers and cardiovascular diseases. It is also associated with communicable diseases, prenatal conditions, injuries, drowning, mental health conditions and violence. Given the extensive list of harmful effects, addressing the harmful use of alcohol is a priority for the World Health Organization.”

At least 148 countries have applied excise taxes to alcoholic drinks, but wine is exempted in at least 22 countries, mostly in Europe. 

Meanwhile, around 108 countries are taxing some sort of sugar-sweetened beverages but the global average is a low 6.6%. In addition, half of all countries taxing SSBs are also taxing water, which is not recommended by WHO. 

The alcohol manual provides data from the tax systems of different countries as well as advice on the different tax options and their administration. It is the third in a series of WHO manuals on harmful products, with previous manuals addressing tobacco and SSB taxes.


Devora Kestel, WHO’s director of Mental Health and Substance Abuse, said that while alcohol was linked to over 200 health conditions and had “far-reaching and often devastating effects”, progress to curb consumption at a country level has been “underwhelming”. 

“The global average of alcohol consumed per person has only seen a marginal decline, highlighting the need for more impactful action,” said Kestel.

Furthermore, the World Bank’s Ceren Ozer pointed out, “in high and low and middle-income countries, alcohol has become more affordable over the last three decades”. 

Moreover, the industry is expecting serious growth in the consumption of alcoholic beverages across the board, she added.

Yet alcohol taxes contributed only about 0.3% of GDP in tax revenue globally, which is about half that of tobacco taxes. However, a few countries have shown progress, said Ozer. 

“For instance, in the Philippines between 2012 and 2020, alcohol excise revenue has increased by 140% in real inflation-adjusted terms following significant increases in beer and spirits excise taxes,” said Ozer.

“South Africa is another country where we have detailed data-driven research that shows improvement not only to revenue but also the health impact due to improvements to after alcohol tax design and increasing in rates leading to significant gains from the late 1990s to recent years,” said Ozer.

South African Treasury official Mpho Legote told the launch that as his country taxed the alcohol content of beverages (as opposed to the size as in some countries), this had “incentivized the industry to introduce lower alcohol beers”, for example.

South African Treasury official Mpho Legote.

Improvements in Kosovo and Lithuania

Kosovo has had a “dramatic increase in revenue” almost entirely due to improvements in tax administration, and tax compliance, with an increase of almost a 25% in alcohol tax revenue between 2019 and 2022, Ozer said.

Meanwhile, Lithuania increased alcohol tax revenue from €234 million in 2016 to €323 million in 2018 and saw alcohol-related deaths drop from 23.4 per 100 000 people in 2016 to 18.1 per 100 000 people in 2018, according to WHO.

“About 0.5% to almost 2% of the country’s GDP is lost every year due to alcohol consumption or alcohol use,” pointed out Odd Hanssen, a health economist with the United Nations Development Program (UNDEP,

“This comes from a couple of ways, mainly in what health systems have to spend in order to treat people who have alcohol-caused diseases, but more significantly, the indirect costs of people with these diseases who are unable to work as productively,” said Hanssen.

No ‘one size fits all’

Explaining the manual’s key messages, the WHO’s Jeremias Paul said that “there is really no one size fits all given the heterogeneity of alcohol beverages and tax structures.

Each country’s context was different, and governments had to “consider several factors, such as the patterns of consumption, the administrative capacity, the different kinds of alcohol, beverages available, the policy goals of a country and the political economy and industry structure”, said Paul.

The bottom line, however, was that “the taxes should be high enough to impact affordability”, said Paul.

“One thing for sure is that you can expect industry pushback to reform and in the manual you can essentially find tips. What are the typical industry arguments against tax increases, and how to counter them.”

Image Credits: Taylor Brandon/ Unsplash.

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