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The Possible Impact of an Alcohol Welfare Surcharge on Consumption of Alcoholic Beverages in Taiwan


The Possible Impact of an Alcohol Welfare Surcharge on Consumption of Alcoholic Beverages in Taiwan

Chun-Yuan Yeh et al. BMC Public Health.


Background: The abuse of alcoholic beverages leads to numerous negative consequences in Taiwan, as around the world. Alcohol abuse not only contributes to cardiovascular disease, hypertension, diabetes and cancer, but it is also an underlying cause of many other serious problems, such as traffic accidents, lost productivity, and domestic violence. International leaders in health policy are increasingly using taxation as an effective tool with which to lower alcohol consumption. In this study, we assessed how consumption patterns in Taiwan would be affected by levying a welfare surcharge on alcoholic beverages of 20%, 40% or 60% in accordance with the current excise tax. We also assessed the medical savings Taiwan would experience if consumption of alcoholic beverages were to decrease and how much additional revenue a welfare surcharge would generate.

Methods: We estimated the elasticity of four types of alcoholic beverages (beer, wine, whisky and brandy) using the Central Bureau of Statistics (CBS) Demand Model. Specifically, we estimated alcohol's price elasticity by analyzing the sales prices and time statistics of these products from 1974 to 2009.

Results: Alcoholic beverages in Taiwan have the following price elasticities: beer (-0.820), wine (-0.955), whisky (-0.587), brandy (-0.958). A welfare surcharge tax of 40% in accordance with the excise tax would decrease overall consumption of beer, wine, whisky and brandy between 16.24% and 16.42%. It would also generate New Taiwan Dollar (NT$) revenues of 5.782 billion to 5.993 billion. Savings in medical costs would range from NT$871.07 million to NT$897.46 million annually.

Conclusions: A social and welfare surcharge of 40% on alcoholic beverages in Taiwan would successfully lower consumption rates, decrease medical costs, and generate revenue that could be used to educate consumers and further decrease consumption rates. Consequently, we strongly recommend that such a tax be imposed in Taiwan.


Figure 1
Figure 1
The price and consumption of beer, wine, whisky and brandy in response to alcohol market opening in 1987 and tobacco health and welfare taxes levied in 2002. Sources: Taiwan Tobacco and Wine Monopoly Bureau 1974–2000; National Treasury Agency 2001–09.

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