The Ukraine government has developed a schedule of annual rate increases for excise goods until 2028. The schedule determines how the government will tax intermediate alcohol and tobacco products, both of which cause massive harm and societal costs in Ukraine.
The government is raising excise duties on intermediate alcohol products from ₴8.42 to ₴12.23 per liter. Intermediate alcohol products are those that have an ABV between 1.2% and 22%. These are not considered to be either beer or wine products.
This tax will earn the government an additional ₴4.5M from the sale of intermediate alcoholic products.
The government expects that raising excise taxes on alcohol products will provide additional – and much needed – revenue for the state budget.
The alcohol and tobacco led NCD epidemic in Ukraine
Alcohol harm in Ukraine is at epidemic levels and the country is one of the highest ranked concerning years of life lost due to alcohol. Therefore, already in 2019, WHO Europe called for urgent action in curbing non-communicable diseases and their risk factors, such as alcohol, in the country.
- More than 8000 cancer deaths were due to alcohol in Ukraine in 2016.
- More than 8000 liver cirrhosis deaths were due to alcohol in Ukraine.
- Nearly 2000 road traffic deaths were due to alcohol.
Five major noncommunicable diseases (NCDs) – cardiovascular diseases, diabetes, cancers, chronic obstructive pulmonary disease and mental health disorders – contributed to nearly 84% of all deaths in Ukraine. Almost 30% of men who died in 2017 from NCDs were in the working age group of 30 to 65 years.
This burden has been unaffordable before Russia’s invasion, and is even further aggravated through the ongoing war.
Benefits of alcohol tax increase for Ukraine society
Despite the fiscal motivation behind the government’s alcohol tax increase, it has important public health implications for the people in Ukraine.
In fact, the benefits of alcohol taxes as the single most cost-effective alcohol policy solutions is well proven. For one, the reduced affordability of alcohol lowers population level alcohol use, helping prevent alcohol harm. It also helps fund social support programs that empower vulnerable people and communities. These are crucial goals for the war-torn country.
A 2023 landmark study identified 30 cost-effective interventions to achieve the Sustainable Development Goals (SDGs) in the fastest way possible. Among these interventions, alcohol policy and especially alcohol taxation have been ranked as the second and third most effective intersectoral policies.
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.
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.
