Estimated Effects of Different Alcohol Taxation and Price Policies on Health Inequalities: A Mathematical Modelling Study

Abstract

Introduction

While evidence that alcohol pricing policies reduce alcohol-related health harm is robust, and alcohol taxation increases are a WHO “best buy” intervention, there is a lack of research comparing the scale and distribution across society of health impacts arising from alternative tax and price policy options. The aim of this study is to test whether four common alcohol taxation and pricing strategies differ in their impact on health inequalities.

Methods and Findings

An econometric epidemiological model was built with England 2014/2015 as the setting. Four pricing strategies implemented on top of the current tax were equalised to give the same 4.3% population-wide reduction in total alcohol-related mortality: current tax increase, a 13.4% all-product duty increase under the current UK system; a value-based tax, a 4.0% ad valorem tax based on product price; a strength-based tax, a volumetric tax of £0.22 per UK alcohol unit (= 8 g of ethanol); and minimum unit pricing, a minimum price threshold of £0.50 per unit, below which alcohol cannot be sold. Model inputs were calculated by combining data from representative household surveys on alcohol purchasing and consumption, administrative and healthcare data on 43 alcohol-attributable diseases, and published price elasticities and relative risk functions. Outcomes were annual per capita consumption, consumer spending, and alcohol-related deaths. Uncertainty was assessed via partial probabilistic sensitivity analysis (PSA) and scenario analysis.

The pricing strategies differ as to how effects are distributed across the population, and, from a public health perspective, heavy drinkers in routine/manual occupations are a key group as they are at greatest risk of health harm from their drinking. Strength-based taxation and minimum unit pricing would have greater effects on mortality among drinkers in routine/manual occupations (particularly for heavy drinkers, where the estimated policy effects on mortality rates are as follows: current tax increase, −3.2%; value-based tax, −2.9%; strength-based tax, −6.1%; minimum unit pricing, −7.8%) and lesser impacts among drinkers in professional/managerial occupations (for heavy drinkers: current tax increase, −1.3%; value-based tax, −1.4%; strength-based tax, +0.2%; minimum unit pricing, +0.8%). Results from the PSA give slightly greater mean effects for both the routine/manual (current tax increase, −3.6% [95% uncertainty interval (UI) −6.1%, −0.6%]; value-based tax, −3.3% [UI −5.1%, −1.7%]; strength-based tax, −7.5% [UI −13.7%, −3.9%]; minimum unit pricing, −10.3% [UI −10.3%, −7.0%]) and professional/managerial occupation groups (current tax increase, −1.8% [UI −4.7%, +1.6%]; value-based tax, −1.9% [UI −3.6%, +0.4%]; strength-based tax, −0.8% [UI −6.9%, +4.0%]; minimum unit pricing, −0.7% [UI −5.6%, +3.6%]). Impacts of price changes on moderate drinkers were small regardless of income or socioeconomic group. Analysis of uncertainty shows that the relative effectiveness of the four policies is fairly stable, although uncertainty in the absolute scale of effects exists. Volumetric taxation and minimum unit pricing consistently outperform increasing the current tax or adding an ad valorem tax in terms of reducing mortality among the heaviest drinkers and reducing alcohol-related health inequalities (e.g., in the routine/manual occupation group, volumetric taxation reduces deaths more than increasing the current tax in 26 out of 30 probabilistic runs, minimum unit pricing reduces deaths more than volumetric tax in 21 out of 30 runs, and minimum unit pricing reduces deaths more than increasing the current tax in 30 out of 30 runs). Study limitations include reducing model complexity by not considering a largely ineffective ban on below-tax alcohol sales, special duty rates covering only small shares of the market, and the impact of tax fraud or retailer non-compliance with minimum unit prices.

Conclusions

Our model estimates that, compared to tax increases under the current system or introducing taxation based on product value, alcohol-content-based taxation or minimum unit pricing would lead to larger reductions in health inequalities across income groups. We also estimate that alcohol-content-based taxation and minimum unit pricing would have the largest impact on harmful drinking, with minimal effects on those drinking in moderation.

Abstract

In this mathematical modelling study, Petra Meier and colleagues estimate the impact of different alcohol taxation and pricing structures on consumption, spending, and health inequalities.

Editors' Summary

Background

People have drunk alcoholic beverages throughout history. However, harmful alcohol consumption is currently responsible for around 2.7 million deaths every year and is a leading risk factor worldwide for heart disease, liver disease, and many other health problems. It also affects the well-being and health of people around those who drink, both within the household and through alcohol-related crime and road traffic crashes. As with most products, the price of alcohol influences how much people buy and consume. Alcohol affordability is an important driver of alcohol consumption, and in many countries, including the UK and US, alcohol prices have not kept pace with inflation and rising incomes. Alcohol taxes have the dual function of raising revenues and regulating alcohol prices. Different countries employ different alcohol-specific taxation structures including taxation by beverage volume, by value, or by alcohol content. Some countries also have additional price control measures that prevent the sale of very cheap alcohol.

Why Was This Study Done?

Although research shows that increases in the price of alcohol brought about by taxation or other pricing policies reduce alcohol consumption and alcohol-related harm, little is known about how alternative tax and price policy options affect the scale and distribution of alcohol-related health impacts across society. This is important because people with lower social status and/or income are disproportionately affected by alcohol-related disease. An effective public health policy to reduce alcohol harm might, therefore, help to reduce social disparities in health (health inequality), a major goal of population health policies in affluent countries.

What Did the Researchers Do and Find?

Here, the researchers use the Sheffield Alcohol Policy Model (SAPM) to investigate the effects of four common alcohol taxation and price policies on health inequalities in England during 2014/2015. SAPM is a deterministic mathematical simulation model that estimates how price changes affect individual-level alcohol consumption and how consumption changes affect the illnesses (morbidity), deaths (mortality), and economic costs associated with 43 alcohol-attributable conditions. The researchers used SAPM to simulate the effect of increasing the existing UK duty on all alcohol products by 13.4% (current tax increase), introducing a 4% tax based on product price (value-based, or ad valorem, taxation), introducing a tax of £0.22 per alcohol unit (strength-based, or volumetric, taxation), or setting a minimum price threshold of £0.50 per alcohol unit (minimum unit pricing). The magnitudes of the different policy-induced price increases modeled were chosen to result in the same overall population-wide 4.3% decrease in alcohol-related mortality. Notably, the impacts of policy changes on moderate drinkers were small, regardless of income/socioeconomic group. However, among heavy drinkers, the effects of the four policies were differentially distributed across the population. Among heavy drinkers in the lowest socioeconomic group (the population group at greatest risk of harm from alcohol use), the estimated effects on mortality rates were −3.2% for the current tax increase (that is, it reduced alcohol-related deaths by 3.2%), −2.9% for value-based taxation, −6.1% for strength-based taxation, and −7.8% for minimum unit pricing. Among heavy drinkers in the highest socioeconomic group, the corresponding effects on mortality rates were −1.3%, −1.4%, +0.2%, and +0.8%.

What Do These Findings Mean?

As with any policy modelling, the accuracy of these findings depends on the evidence base, the quality of the data incorporated into the model, and the assumptions used. Limitations to the analysis here include that, due to an absence of evidence, the researchers have not examined the impact of any tax avoidance, which could potentially vary between the policies. The study findings suggest that in England (and probably in other countries) the introduction of strength-based taxation or minimum unit pricing would lead to larger reductions in health inequalities among heavy drinkers than an increase in the current tax rate or the introduction of value-based taxation. That is, the two policy options that target cheap, high-strength alcohol are likely to outperform value-based taxation and increasing the current UK tax in terms of reducing health inequalities. Thus, although these policies might be considered “regressive” (i.e., affecting the poor more than the rich) in terms of consumption and spending, they are at the same time “progressive” in that they reduce health inequalities. Finally, these findings suggest that minimum unit pricing and strength-based taxation, unlike the other two options tested, would target harmful drinking without unnecessarily penalizing people with low incomes who drink moderate amounts of alcohol.

Additional Information

This list of resources contains links that can be accessed when viewing the PDF on a device or via the online version of the article at http://dx.doi.org/10.1371/journal.pmed.1001963.

• The World Health Organization provides detailed information about alcohol, including a fact sheet on the harmful use of alcohol; its Global Status Report on Alcohol and Health 2014 provides country information on the impact of alcohol use on health and policy responses; its Global Strategy to Reduce Harmful Use of Alcohol includes information on pricing policies; the Global Information System on Alcohol and Health provides further information about alcohol control policies

• The US National Institute on Alcohol Abuse and Alcoholism has information about alcohol and its effects on health; it provides interactive worksheets to help people evaluate their drinking and decide whether and how to make a change

• The US Centers for Disease Control and Prevention provides information on alcohol and public health and a fact sheet on preventing excessive alcohol use

• The UK National Health Service Choices website provides detailed information about drinking and alcohol, including information on the risks of drinking too much, tools for calculating alcohol consumption, and personal stories

• EuroCare is an alliance of non-governmental public health and social organizations working on the prevention and reduction of alcohol-related harm in Europe; it provides information about alcohol taxation in the European Union

• The UK Institute of Alcohol Studies advocates for the use of scientific evidence in policymaking to reduce alcohol-related harm and produces easily accessible briefings on alcohol policy issues

• MedlinePlus provides links to many other resources on alcohol

• Information about the Sheffield Alcohol Policy Model is available

• The UK Chief Medical Officers’ proposed new alcohol guidelines are available