Are Alcohol Taxation and Pricing Policies Regressive? Product-Level Effects of a Specific Tax and a Minimum Unit Price for Alcohol

Alcohol Alcohol. 2016 Jul;51(4):493-502. doi: 10.1093/alcalc/agv133. Epub 2015 Dec 30.


Aims: To compare estimated effects of two policy alternatives, (i) a minimum unit price (MUP) for alcohol and (ii) specific (per-unit) taxation, upon current product prices, per capita spending (A$), and per capita consumption by income quintile, consumption quintile and product type.

Methods: Estimation of baseline spending and consumption, and modelling policy-to-price and price-to-consumption effects of policy changes using scanner data from a panel of demographically representative Australian households that includes product-level details of their off-trade alcohol spending (n = 885; total observations = 12,505). Robustness checks include alternative price elasticities, tax rates, minimum price thresholds and tax pass-through rates.

Results: Current alcohol taxes and alternative taxation and pricing policies are not highly regressive. Any regressive effects are small and concentrated among heavy consumers. The lowest-income consumers currently spend a larger proportion of income (2.3%) on alcohol taxes than the highest-income consumers (0.3%), but the mean amount is small in magnitude [A$5.50 per week (95%CI: 5.18-5.88)]. Both a MUP and specific taxation will have some regressive effects, but the effects are limited, as they are greatest for the heaviest consumers, irrespective of income. Among the policy alternatives, a MUP is more effective in reducing consumption than specific taxation, especially for consumers in the lowest-income quintile: an estimated mean per capita reduction of 11.9 standard drinks per week (95%CI: 11.3-12.6).

Conclusion: Policies that increase the cost of the cheapest alcohol can be effective in reducing alcohol consumption, without having highly regressive effects.

MeSH terms

  • Alcohol Drinking / economics
  • Alcohol Drinking / epidemiology
  • Alcoholic Beverages / economics*
  • Australia / epidemiology
  • Commerce / economics
  • Consumer Behavior / economics
  • Consumer Behavior / statistics & numerical data
  • Costs and Cost Analysis / economics*
  • Humans
  • Public Policy / economics*
  • Taxes*