Tim Stockwell Director, Centre for Addictions Research of BC ( ) Professor, Department of Psychology University of Victoria, BC, Canada Beer, wine, spirits? It’s the same difference…. 16 th Annual NABCA Symposium, “Alcohol Beverage Law and Regulation”, Arlington, VA March 9-11, 2009

B.C. spirits: Less bang for your booze bucks B.C. moves to raise the price of spirits p.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: High 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 alcohol use is well-established Meta-analysis by Wagenaar et al (2009): Identified 112 studies worldwide ( ) with 1007 estimates and conclude:  A 10% increase in price leads to a 4.4% decrease in consumption - and 2.8% for heavy drinkers Meta-analysis by Gallet (2007): Identified 132 studies, and concludes:  A 10% increase in price leads to an average of a 5% decrease in consumption

Impact of price and taxation When 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, 2003 All alcohol-related illnesses and injuries (Chaloupka et al, 2002; Chikritzhs et al, 2005)

Health risks and possible benefits from alcoholic beverages are directly related to the dose of ethanol – both for individuals and populations

Relative Risk for Cancers at different levels of alcohol consumption Risk Rate Source: Bagnardi, V. et al.(2001) A meta-analysis of alcohol drinking and cancer risk. British Journal of Cancer 85:

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): Price Elasticities for Alcohol Sales and Alcohol Related Crashes 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 ( ) 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 minimise taxes  Two Dogs Alcoholic Lemonade  Lemon Russki – a “vodka-based” drink  Canadian 7% coolers  Australian low alcohol beers

Producers will always seek to minimise taxes A great Australian invention: Alcoholic Lemonade NB No excise on Australian wine, only sales taxes

Another Australian alcoholic lemonade: Lemon Ruski Designed as a lobbying strategy to get same tax 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 Favourite With 7% alcohol content retails on average at $2.60 cheaper per 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 type and strength % Alcohol content Federal excise per gallon of ethanol BeerWineSpirits* 3.5%$16.57$30.57$ %$8.29$15.29$ %$5.80$10.70$ %$3.87$10.46$20.10 *Assumes 40% spirits added to sodas/lemonade or wine

Pricing and taxation strategies to minimise alcohol related harm – and 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