Minimum pricing of alcohol versus volumetric taxation: which policy will reduce heavy consumption without adversely affecting light and moderate consumers?

PLoS One. 2014 Jan 22;9(1):e80936. doi: 10.1371/journal.pone.0080936. eCollection 2014.

Abstract

Background: We estimate the effect on light, moderate and heavy consumers of alcohol from implementing a minimum unit price for alcohol (MUP) compared with a uniform volumetric tax.

Methods: We analyse scanner data from a panel survey of demographically representative households (n = 885) collected over a one-year period (24 Jan 2010-22 Jan 2011) in the state of Victoria, Australia, which includes detailed records of each household's off-trade alcohol purchasing.

Findings: The heaviest consumers (3% of the sample) currently purchase 20% of the total litres of alcohol (LALs), are more likely to purchase cask wine and full strength beer, and pay significantly less on average per standard drink compared to the lightest consumers (A$1.31 [95% CI 1.20-1.41] compared to $2.21 [95% CI 2.10-2.31]). Applying a MUP of A$1 per standard drink has a greater effect on reducing the mean annual volume of alcohol purchased by the heaviest consumers of wine (15.78 LALs [95% CI 14.86-16.69]) and beer (1.85 LALs [95% CI 1.64-2.05]) compared to a uniform volumetric tax (9.56 LALs [95% CI 9.10-10.01] and 0.49 LALs [95% CI 0.46-0.41], respectively). A MUP results in smaller increases in the annual cost for the heaviest consumers of wine ($393.60 [95% CI 374.19-413.00]) and beer ($108.26 [95% CI 94.76-121.75]), compared to a uniform volumetric tax ($552.46 [95% CI 530.55-574.36] and $163.92 [95% CI 152.79-175.03], respectively). Both a MUP and uniform volumetric tax have little effect on changing the annual cost of wine and beer for light and moderate consumers, and likewise little effect upon their purchasing.

Conclusions: While both a MUP and a uniform volumetric tax have potential to reduce heavy consumption of wine and beer without adversely affecting light and moderate consumers, a MUP offers the potential to achieve greater reductions in heavy consumption at a lower overall annual cost to consumers.

Publication types

  • Research Support, Non-U.S. Gov't

MeSH terms

  • Alcohol Drinking / economics*
  • Alcoholic Beverages / economics*
  • Alcoholic Intoxication / economics
  • Alcoholic Intoxication / prevention & control
  • Alcoholism / economics
  • Alcoholism / prevention & control
  • Beer / economics*
  • Costs and Cost Analysis / economics
  • Costs and Cost Analysis / methods
  • Data Collection / economics
  • Humans
  • Taxes / economics*
  • Victoria
  • Wine / economics*

Grant support

This work was supported by the Australian Research Council Discovery Project Grant number DP120102252. The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.