Tim StockwellTim Stockwell

Director, Centre for Addictions Research of BC (Director, Centre for Addictions Research of BC (

www.carbc.cawww.carbc.ca))Professor, Department of PsychologyProfessor, Department of Psychology

University of Victoria, BC, CanadaUniversity of Victoria, BC, Canada

Beer, wine, spirits? Beer, wine, spirits? It’s the same difference….It’s the same difference….

16th Annual NABCA Symposium, “Alcohol Beverage Law and Regulation”, Arlington, VA

March 9-11, 2009

B.C. spirits: Less bang for your booze bucksB.C. moves to raise the price of spiritsp.1 Times Colonist, Victoria, BC, February 24, 2009  

                                                                         

Increase in minimum price of 750ml bottle by $1.00

Comments:“another cash grab”“ridiculous”“step closer to fascism”vs.“double the prices”

Alcohol Taxes and Public Health: Alcohol Taxes and Public Health: High stakes and a hard sellHigh stakes and a hard sell

Substantial government revenue – CA$8+bn

Major cause of preventable death, injury and

illness – 8,000+ per annum

Taxation is the single most powerful lever for

influencing levels of alcohol-related harm

Major manufacturing, marketing and retail

industries employing many thousands

Public acceptability of tax increases usually low

Principle of using price to control Principle of using price to control alcohol use is well-establishedalcohol use is well-established

Meta-analysis by Wagenaar et al (2009):Meta-analysis by Wagenaar et al (2009):Identified 112 studies worldwide (1823-2007) with 1007 Identified 112 studies worldwide (1823-2007) with 1007 estimates and conclude: estimates and conclude:

A 10% increase in price leads to a 4.4% decrease in A 10% increase in price leads to a 4.4% decrease in consumption - and 2.8% for heavy drinkersconsumption - and 2.8% for heavy drinkers

Meta-analysis by Gallet (2007):Meta-analysis by Gallet (2007):Identified 132 studies, 1945-2003 and concludes: Identified 132 studies, 1945-2003 and concludes:

A 10% increase in price leads to an average of a 5% A 10% increase in price leads to an average of a 5% decrease in consumptiondecrease in consumption

Impact of price and taxationImpact of price and taxationWhen price of alcohol goes up, there are usually reduced rates of:Alcohol-dependence (Farrell et al, 2003; Cook et al, 2002)Liver cirrhosis and road trauma (Babor et al, 2003)Youth suicide (Markowitz et al, 2003All alcohol-related illnesses and injuries (Chaloupka et al, 2002; Chikritzhs et al, 2005)

Health risks and possible Health risks and possible benefits from alcoholic benefits from alcoholic beverages are directly beverages are directly

related to the dose of ethanol related to the dose of ethanol – both for individuals and – both for individuals and

populationspopulations

Relative Risk for Cancers at different levels of alcohol consumption

0

1

2

3

4

5

6

7

25g/D

ay

50g/D

ay

100g

/Day

Mouth

Oesophagus

Throat

Breast

Liver

Colon

Stomach

Ris

k R

ate

Source: Bagnardi, V. et al.(2001) A meta-analysis of alcohol drinking and cancer risk. British Journal of Cancer 85: 1700-1705.

Source: Gruenewald, P.J. and Treno, A.J. (2000) Local and global alcohol supply: economic and geographic models of community systems. Addiction 95(supp 4): 537-549.

Price Elasticities for Price Elasticities for Alcohol Sales and Alcohol Related Alcohol Sales and Alcohol Related

Crashes in 51 StatesCrashes in 51 States

Costs and Benefits of Alcohol Abuse for Canadians

Total Costs for Canada, 2002 = CA$15bn and for BC = CA$2.2 bn

Direct Economic Costs to Government (2002)Health care costs $550,981,434

Enforcement costs $359,170,000

Total $910,151,434

Source: Rehm et al (2006)

Direct Economic Benefits to Government (2002-03)Net income from sale of alcoholic beverages $660,424,000

PST + Social Services Tax $187,405,100

Total $847,829,100

Source: Statistics Canada, 2003

Producers will always seek to Producers will always seek to minimise taxesminimise taxes

Two Dogs Alcoholic Lemonade

Lemon Russki – a “vodka-based” drink

Canadian 7% coolers

Australian low alcohol beers

Producers will always seek to Producers will always seek to minimise taxesminimise taxes

A great Australian invention: Alcoholic Lemonade

NB No excise on Australian wine, only sales taxes

Another Australian alcoholic Another Australian alcoholic lemonade: Lemon Ruskilemonade: Lemon Ruski

Designed as a lobbying strategy to get sametax breaks as wine-based coolers:Contained 1.15% vodka (no tax)Plus 4% low grade wine ie excise free

Mike’s Hard Lemonade – a Canadian Mike’s Hard Lemonade – a Canadian FavouriteFavourite

With 7% alcohol content retails on average at $2.60 cheaperper litre than 5% alcohol content coolers

• Since late 1980s Australia has taxed low alcohol beer less. • Now about 40 varieties of Australian beer with 2.5% to 3.5% alcohol with up to 40% share of beer market• In BC just 3 equivalent brands with <1% beer market – reverse price incentives• Evidence of health and safety benefits

The Success of Australian Low Alcohol

Beer

Young male beer drinkers cannot distinguish low Alcohol from regular beers in blind taste tests

Rates of US federal excise by beverage Rates of US federal excise by beverage type and strengthtype and strength

% Alcohol % Alcohol contentcontent

Federal excise per Federal excise per gallon of gallon of ethanolethanol

BeerBeer WineWine Spirits*Spirits*

3.5%3.5% $16.57$16.57 $30.57$30.57 $20.10$20.10

7%7% $8.29$8.29 $15.29$15.29 $20.10$20.10

10%10% $5.80$5.80 $10.70$10.70 $20.10$20.10

15%15% $3.87$3.87 $10.46$10.46 $20.10$20.10

*Assumes 40% spirits added to sodas/lemonade or wine

Pricing and taxation strategies to Pricing and taxation strategies to minimise alcohol related harm – and minimise alcohol related harm – and

regulatory hassles!regulatory hassles!

Tax ethanol not production costs ie switch to

volumetric from sales taxes

Base minimum prices and mark-ups on ethanol

content

Index tax and minimum prices to cost of living

Harm reduction levies on high content drinks