The Lao President has increased excise taxes in the country to reduce the outflow of foreign currency from the country. The tax increase also applies to alcohol and tobacco products being bought into the country.
Although the government is not implementing the tax increase from a public health perspective, the policy will benefit the country for two reasons.
- One benefit is of course the tax revenue earned through taxing a harmful product and industry in the country.
- The other benefit is the public health and development benefit of protecting the people from alcohol harm.
Understanding the Lao PDR alcohol tax increase
Beer products however are exempt from the tax increase.
The tax for alcohol products with an ABV of 23% will be increased from 70% to 110%.
The tax for products with an ABV between 10% to 23% will increase from 60% to 90%.
Products with an ABV of less than 10% will have an added excise tax of 72%.
Another harmful product seeing excise tax increases is tobacco. Cigarettes will see their taxes being increased from 50% to 72%. The tax on other tobacco products will increase from 35% to 47%. Other products that will have their taxes increased include sugary drinks, slot machines, gaming machines, and all types of gambling equipment that have a valid license.
The government hopes to curb foreign currency outflow, to encourage savings, and to drive social and economic development through the tax increase.
Lao study explores alcohol’s harm to others and subjective well-being
Studies have previously confirmed that the number of heavy alcohol users in a household negatively correlates with the subjective well-being of people in the household. In 2020, researchers analysed population survey data on 1205 and 1491 individuals aged 18 to 64 years from Lao People’s Democratic Republic (Lao PDR) and Thailand. The study examined the respondents’ experiences of alcohol’s second-hand harm and their subjective well‐being.
The study found significant links between second-hand harm due to alcohol and subjective well‐being, particularly in relation to physical and financial harm.
The excise tax increase in Laos therefore will help reduce alcohol-related physical harm people face in the country.
High level of alcohol harm in Lao PDR
According to 2017 statistics, there were 2,360 deaths and 180,000 accidents related to alcohol. The first six months of the year also recorded 500+ road fatalities in the country. most of which were attributed to alcohol.
The World Health Organization reported that in 2017, the economic burden of alcohol amounted to 2% of the growth domestic product in Lao PDR.
Alcohol was also causing more than 300,000 illnesses and about 180,000 people with an alcohol use disorder.
About 2,360 road traffic deaths were estimated to be alcohol-involved. In fact, about 90% of road crashes involved driving under the influence of alcohol, speeding, and other road violations. Many crashes occur on weekends and on special occasions when people get together to consume alcohol.
The WHO report also indicated that the rate of alcohol consumption in Lao PDR is higher than in other countries in the South-East Asian region. It is projected to rise even more without proper alcohol policy solutions being put in place.
It appears that awareness about alcohol harm is not taking root in the public despite efforts in this regard. Meanwhile, alcohol consumption and promotion appear to be growing all the time, increasing the health, social, and economic burden of alcohol harm in Lao PDR.
Increasing the alcohol excise tax on some alcohol products is therefore a good start but more of the WHO-recommended alcohol policy best buys need to be implemented in Lao PDR.
The potential of alcohol policy to help reach the SDGs
In early 2023 a New Study: Alcohol Taxation Among 12 Most Efficient Ways to Eradicate Poverty, Promote Development in the fastest way possible. Among these interventions, alcohol policy and especially alcohol taxation have been ranked as the second and third most effective policies.
Implementing these measures could prevent 150,000 deaths caused by alcohol in the next ten years. For every dollar spent, a country could get back $76 worth of good things happening in society, while alcohol taxation alone can generate benefits worth $53 for every dollar spent.
Researchers of the Copenhagen Consensus Center examined the benefit-cost analyses of various NCD interventions in low-income (LICs) and lower–middle–income (LMCs) countries. The analyzed 30 interventions recommended by the Disease Control Priorities Project, including six intersectoral policies, such as taxes and 24 clinical services. Using a previously published model to estimate intervention costs and benefits through 2030, researchers found that intersectoral policies often provided great value for money.
They conclude that there are several cost-beneficial opportunities to tackle NCDs in LICs and LMCs. In countries with very limited resources, the best-investment interventions could begin to address the major NCD risk factors, especially tobacco and alcohol, and build greater health system capacity, with benefits continuing to accrue beyond 2030.
Improving alcohol policies could reduce overall alcohol consumption and avert 150,000 deaths over the rest of the decade until 2030.
Each dollar spent on alcohol policy development will deliver $76 of social benefits.
An alcohol tax increase alone can generate large, if slightly lower, benefits at $53 back on the dollar.