Minimum pricing policies for alcohol, specifically minimum unit pricing (MUP), have been catching on in several European countries and other jurisdictions globally to help solve the problems caused by ultra cheap alcohol.
Therefore, the World Health Organization’s Regional Office in Europe released a report about minimum pricing titled “No Place for Cheap Alcohol: The Potential Value of Minimum Pricing For Protecting Lives”. The report aims to inform member states who might be considering implementing MUP policies.
The report is about the various minimum pricing policies that are in place around the world.
Other variants of minimum pricing are applied per liter of beverage. These types of minimum pricing are in force in Canadian provinces, Slovakia, and many former USSR countries. These are often targeted at particular products (most commonly vodka or other spirits), sometimes with different rates for on and off-trade.
The WHO Europe report also includes a number of objections or concerns around minimum pricing policies. However, there is little evidence to support these objections. Overall minimum pricing policies are found to work as intended.
- The policy reduces alcohol use by the heaviest users.
- The policy has limited impact on those who consume alcohol at lower levels.
- The policy has low or no negative consequences for businesses and possible benefits to the economy.
- The policy does not drive significant increases in illicit alcohol.
- Minimum pricing policies can increase costs for poorer households, but those households see more health benefits from the policy.
- Minimum pricing can have a modest negative effect on government revenues from alcohol tax. However, these may be offset by lower demands on public services.
WHO Europe explains the main findings of the report in a Q&A format.
How bad is the situation with alcohol consumption in Europe?
Alcohol is a leading global risk factor for ill health and premature mortality and is responsible for almost 1 million deaths in the WHO European Region each year. Globally, this Region has the highest share of deaths caused by alcohol consumption – about 12% of male and 8% of female deaths.
Alcohol use disorders are just the tip of the iceberg. The vast majority of alcohol-attributable deaths are due to common causes, such as cardiovascular and digestive diseases, cancers and injuries.
We already have taxes on alcohol, and still alcohol use levels are high. Why?
All countries of the WHO European Region have some form of alcohol tax in place – but many of them are not designed and implemented in a way that is likely to improve people’s health.
For instance, many countries of the European Union do not charge any duty on wine. The vast majority of countries do not adjust their alcohol taxes for inflation, meaning that alcohol gets cheaper over time. There are also countries that subsidise production of certain alcoholic beverages, such as wine, which offsets any impact that higher taxes may have on their affordability.
It is crucial that alcohol taxation is designed and implemented in a way that protects health, and this can be further enhanced with minimum pricing policies, which eliminate particularly cheap forms of alcohol that are most strongly associated with heavy alcohol use.
If properly established, minimum pricing policy and alcohol taxation are among the most effective and cost–effective measures to reduce alcohol consumption and harms.
What is a minimum pricing policy? Is it just another type of alcohol tax?
No. Taxation is a specific charge levied on the sale of alcohol products that can be based on the price, alcohol content or product volume and whose revenue goes directly to government. As a result, taxation affects the price of all alcoholic products to some extent.
In contrast, a minimum pricing policy sets a fixed price level below which a fixed volume of alcohol or alcohol product cannot be sold. As a result, minimum pricing only affects the prices of cheap, high-strength alcohol, however much of the additional revenue raised is likely to go to retailers and producers of alcohol. Taxation and minimum pricing can be used together to design an effective fiscal policy that reduces alcohol consumption and harms while retaining revenue for government.
One of the most effective forms of minimum pricing policy is minimum unit pricing (MUP). This approach sets a level below which a fixed volume of alcohol (such as a standard drink) cannot be sold. As MUP is linked to the alcohol content of the beverage it will always be higher for stronger than for low-alcohol drinks. Therefore it is the most effective approach at targeting the low-cost, high-strength alcohol most strongly associated with high levels of alcohol harm.
Why do you call minimum pricing highly effective? What does it do?
It reduces the affordability of particularly cheap forms of alcoholic beverages and as a result encourages consumers and producers to favour lower-strength alcohol products. This is because, unlike taxation, minimum pricing only affects the prices of higher-strength, low price alcohol.
This is especially important for young people and heavier alcohol users, particularly those from lower socioeconomic groups, who are most vulnerable to alcohol harm.
Minimum pricing policies and MUP can effectively target these alcohol users, reduce their overall consumption and heavy alcohol intake episodes and thus their health risks, leading to improvements in public health and a reduction in health inequalities.
Are there any countries that have already tried the minimum pricing measures?
These policies continue to be vastly underused across all the world and the WHO European Region.
- Of the 53 WHO European Region Member States, only 11 countries have some form of minimum pricing on alcoholic beverages (mostly imposed on vodka and other spirits).
- Only four countries have a MUP on all alcoholic beverages (Armenia, Ireland, Ukraine and the United Kingdom – only in Scotland and Wales), in Ukraine the MUP is imposed on spirits only.
- All five countries of the Eurasian Economic Union (Armenia, Belarus, Kazakhstan, Kyrgyzstan and the Russian Federation) have minimum pricing policies for some alcoholic beverages.
- Ireland and Slovakia are the only EU countries with minimum pricing policies for alcohol.
Are you sure that minimum pricing policies are effective? It seems they will force heavy alcohol users to switch for less safe alcoholic beverages and to spend more money on alcohol.
The latest evidence shows that this is not true.
More households with lower income and heavier alcohol users reduced their alcohol consumption and enjoyed health benefits after introduction of MUP or other minimum pricing policies. There has been very little evidence to support concerns about heavy alcohol users switching to illicit or non-beverage alcohol, or illicit drugs, in any significant numbers where minimum prices have been introduced.
But surely dependent drinkers won’t change their behaviour if a minimum price is introduced?
It is important to recognise that the majority of very heavy alcohol users are not dependent on alcohol and there is strong evidence to support the fact that they will reduce their alcohol use when alcohol becomes more expensive.
For people with alcohol dependence, who are a very diverse population with many complex needs, minimum pricing may have beneficial effects for some and negative effects for others. Evidence suggests that these negative effects are not widespread, however minimum pricing policies should be introduced as part of a comprehensive policy package and additional support and services at the level of healthcare systems and communities (such as provision of high quality alcohol treatment services) for dependent alcohol users are essential alongside the introduction of minimum pricing policies
Minimum pricing policies will clearly harm businesses and economies. What do you say about that?
This is also not true – it is clear that the long-term economic benefits (for example through reductions in alcohol harms) far outweigh any short-term negative effects. Indeed there is very little evidence of any negative impacts on the economy where minimum prices have been introduced.
The new WHO report analyses six most common objections against minimum pricing. These are very similar to the objections used against higher alcohol taxation and the evidence shows that most of them do not stand up to fact checks.
The evidence for minimum pricing
Dr. Aveek Bhattacharya, Chief Economist, The Social Market Foundation who was a contributor to the WHO Europe report on minimum pricing breaks down the contents of the report.
Dr. Bhattacharya first breaks down different data in the report to back minimum pricing measures. These evidence comes from:
- Indirect evidence that supports the underlying theory of minimum pricing.
- Reducing the affordability of alcohol reduces consumption and harm. There is a large body of research on this fact drawn mostly from studies of changes in alcohol taxes.
- Evidence from simulation modeling studies that combine the above indirect evidence with other data to estimate the impact of minimum pricing.
- For example, analysis from the Sheffield Alcohol Policy Model.
- Direct evaluation studies which analyze real-world minimum pricing policies.
- These have mainly come from Canada and Scotland, though evidence from other settings has been encouraging.
The Movendi International website provides a large database of information regarding minimum unit pricing.
Practical implementation of minimum pricing policies
Dr. Bhattacharya and his colleagues then cover practical implementation aspects of minimum pricing policies. Noting the six-year legal battle in Scotland to implement the MUP the report looks at the requirements for the policy to be ruled consistent with international trade law.
The report then details different approaches countries with minimum pricing have taken to publicizing and enforcing the policy. Scotland for example focused its attention on business while Wales focused on public information campaigns. In both Scotland and Wales enforcement is proactive, with retailers inspected for compliance, but in Canada enforcement is reactive whereby authorities rely on complaints.
The report discussed good practices for monitoring and evaluation of minimum pricing policies. Drawing from the Scottish example these are:
- Governments should set up robust and independent analyses in advance, actively and transparently engaging with stakeholders to build trust and credibility.
- Research teams must be given access to the best available data and to the outcomes they measure, reflecting a clear theory of change.
In the end, the report compares alcohol minimum pricing policies with alcohol taxation policies. According to the report, MUP is likely to be more effective and better targeted than other forms of minimum pricing. Both MUP and other minimum pricing policies are likely to be more targeted, though costlier to governments, than taxation. However, these two approaches are considered complimentary rather than alternatives to decreasing the affordability of alcohol products.
This guide is a unique resource for policimakers as more and more governments become interested in minimum pricing policies. It allows for policymakers to review the evidence and compare how the policy has worked in different jurisdictions to draw parallels with their own jurisdiction.
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