World Health Organisation: Launch of Technical Manual on Alcohol Tax Policy and Administration

On 5 December 2023 a webinar was held to launch the WHO technical manual on alcohol tax policy and administration. See: WHO technical manual on alcohol tax policy and administration .

Rudiger Krech, the director of health promotion at the WHO, noted that health taxes can be an effective part of a comprehensive package of measures to limit alcohol use. In the past five years around two -thirds of WHO member states have introduced or increased taxes on tobacco, alcohol or sugar sweetened beverages (SSBs). The Manual discusses policy and implementation, to help countries navigate health tax reforms. Tax reduces the health burden, and also increases tax revenue. The excise tax on alcohol can improve health, equality and revenue.

Currently, alcohol excise taxes are generally not high and there is room to raise more tax. Tax needs to be combined with information measures to raise awareness of harm. Alcohol tax increases are politically challenging, and the Manual describes the tactics used by the alcohol industry.

Ceren Ozer of the World Bank global tax program agreed that alcohol excises have large revenue potential. Over the years they have generally increased very little compared to the price of the products themselves, so the products have become more affordable. On average alcohol duty is 0.3% of GDP globally (about half the amount of tobacco duty). Strong revenue administration is important for efficient excise collection. There needs to be a legal framework and cooperation between tax and customs authorities. Design is important for the tax structure.

Patrick Petit of the IMF noted that since 2008 borrowing has been cheap, so countries have built up high debt levels. Now interest rates have risen so more tax is needed to improve the public finances. In this context there is scope for raising the excise tax on alcohol. Tax should be based on alcohol content. Wine and spirits have higher value and this could be taxed. Tax must be simple and part of a broader policy package including regulation of alcohol use.

Odd Hanssen of the UNDP noted that work has been done to calculate the cost of illness from alcohol etc. Globally around 0.5% to 2% of GDP is lost each year to alcohol consumption, through healthcare costs and loss of productive work. Around 1% of GDP is lost on average in each country. The cost of addressing alcohol problems is relatively small, so the return on investment is 5 to 10 times the amount invested.

There is a link between alcohol tax and the sustainable development goals (SDGs). When alcohol duty is charged appropriately, domestic resource mobilisation increases, and some health spending can be redistributed to other purposes. Alcohol excise tax helps to achieve SDG’s relating to poverty, hunger and improvements to education. There are also improved gender outcomes in households, including less violence.

Jeremias Paul jr, head of fiscal policy for health promotion at the WHO, added that alcohol tax is a cost-effective tool, bearing in mind the economic cost of alcohol use. The Manual can help alcohol tax reform in relation to policy development, design, implementation and administration. This can help countries meet their global commitments, and can help to accelerate the WHO tax work.

The main takeaways from the Manual are that countries need to design the tax structure based on country context, taking account of the patterns of consumption; administrative capacity; policy goals; and political economy. Excise taxes should be increased significantly to reduce affordability of the harmful products, as affordability is linked to levels of consumption of the products. Taxes should be high enough to reduce affordability and tax rates should be regularly adjusted for real income and inflation.

It is also important to strengthen the tax administration, with clear administrative systems to deal with product heterogeneity. There should be coordination among the key authorities, to manage alcohol-specific tax administration challenges. Monitoring and evaluation should also be strengthened. Tax administrations need to understand the alcohol markets; the types of beverage consumed; the impact on consumption; and patterns of drinking. Governments should expect industry pushback and understand the tactics used by the industry. Also, they must understand the product categories used in the industry.

Jurgen Rehm of the Centre for Addiction and Mental Health noted that the burden of alcohol use provides a rationale for imposing excise tax. There are 2.6 million alcohol-related deaths worldwide each year, so every 20th death would not have occurred without alcohol use. Countries need to look at the burden of alcohol and the patterns of use, then adjust the taxation.

Jeffrey Drope of the University of Illinois emphasised that a case for alcohol excise tax must be made to key stakeholders. Evaluations can be developed of the alcohol tax over time. Visual help with the data is useful in convincing lawmakers, using maps rather than spreadsheets.

Jurgen Rehm added that stakeholders need to be given indicators that they know, such as life expectancy over time, or the number of hospitalisations or deaths avoided by the introduction of alcohol tax. This type of data can be clear and convincing in parliament.

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