Increase in excise taxes on alcohol can yield €14 to €20 billion in societal benefits
An increase in excise taxes of 50% over a period of 50 years will result in societal benefits of €14 to €20 billion in the Netherlands.
The benefits to society from the increases in alcohol taxation would be substantial and positively affect different aspects of society:
- Improvement of work productivity,
- Prevention of premature deaths,
- Fewer traffic accidents,
- Less police and justice costs and
- Less school drop-outs.
These are examples of the positive effects if total alcohol consumption would be reduced, according to new research conducted by RIVM, the National Institute for Public Health and the Environment.
Analyzing regulatory policy measures
For the research, RIVM use the Social Cost-Benefit approach (SCBA) to analyse regulatory policies to reduce alcohol use and express benefits in monetary terms.
Research was conducted in to the social cost-benefits of three policy measures, also known as three best buys. They are:
- Further increase of excise taxes (Affordability)
- Reduction of the number of points of sale (Availability)
- Total ban of advertisements (Marketing).
The research fins that societal benefits are greatest if excise taxes are increased, followed by the decreasing alcohol availability through reducing of the number of points of sale with 25%. An advertisements ban and reduction of points of sale with 10% are likely to have a smaller effect.
Alcohol costs in the Netherlands
In 2013 the net costs of alcohol were €2,3 to €2,9 billion. Examples of these costs are:
- Premature deaths,
- Less productivity at work,
- Reduced quality of life due to alcohol related diseases,
- Costs of police and justice deployment,
- Traffic accidents and
- Health care costs.
Reducing affordability through excise taxes
In the long run, over a period of 50 years, an increase in excise taxes of 50% will result in societal benefits of €14 to €20 billion, an increase of excise taxes of 200% will result in societal benefits of €37 to €47 billion.
Decreasing availability through reduction in points of sale
The societal benefits of closure of 10% of alcohol outlets in the Netherlands are estimated at €3 to €5 billion after 50 years, and at €8 to €12 billion when 25% of points of sale would be closed.
Advertising ban
The societal benefits of a ban on alcohol advertising would amount to €7 billion after 50 years, but there is more uncertainty about this result as proof that a ban on alcohol effectively lowers the consumption of alcohol is not as strong as the evidence of the effectiveness of the two other policies.
The study was funded by the Netherlands Organization for Health Research and Development (ZonMw) and was commissioned by the Ministry of Health, Welfare and Sport (VWS).
Research was conducted in close cooperation with Trimbos Institute, Ecorys and Maastricht University.