The ‘Policy Dialogue on Alcohol Control for a Healthier Sri Lanka’ generated a number key insights into the health and economic burden of alcohol in Sri Lanka. Experts discussed the evidence, making the case for accelerated alcohol policy action in the country to boost health of the people, household finances of families, and Sri Lanka’s economy.

Sri Lankan experts used a discussion forum as oppurtunity to discuss the need for improved alcohol policy in Sri Lanka. The ‘Policy Dialogue on Alcohol Control for a Healthier Sri Lanka’ event was organized by the Institute of Policy Studies (IPS). The event painted a stark image of the alcohol-related challenges that Sri Lanka is struggling with. IPS held this event as part of the ‘RESET Alcohol’ initiative.

Experts who attended the event highlighted the efficacy of alcohol taxation as the most effective policy solution to prevent and reduce alcohol harm.

  • Dr Nisha Arunatilake, the Director of Research at IPS, and Mr. Pubudu Sumansekara, consultant for the RESET Alcohol Initiative in Sri Lanka and Vice President of Movendi International, detailed the scope and intentions of RESET Alcohol.
  • Dr. Alan Ludovyke, the Chairman of the National Alcohol and Tobacco Authority delivered the key note address. He highlighted that economic elements of alcohol policy, such as pricing and taxation, could be utilised to change alcohol norms in the country.

In Sri Lanka, non-communicable diseases (NCDs), such as cancer and heart disease, are the causal factor of a staggering 83% of all deaths. Alcohol and tobacco use are two of the main causal factors for NCDs globally.

Alcohol harm also places a heavy healthcare burden on the country, which struggles to provide free healthcare for all.

Chronic diseases biggest killer in Sri Lanka
NCDs are the causal factor of a staggering 83% of all deaths in Sri Lanka.

One study carried out into the costs of alcohol for the country found that in 2015, Sri Lanka’s alcohol industry cost it $885.86 Million. This is equivalent to 1.07% of Sri Lanka’s GDP for the year.

The World Health Organisation spearheaded the research.

Massive economic loss
Alcohol harm cost Sri Lanka more than 1% of GDP in 2015.

Addressing alcohol use and its harms through effective implementation of evidence-based polices and interventions is urgently required to address the economic costs of alcohol use in Sri Lanka as it imposes a significant burden to the country.

Alcohol related conditions imposed a significant economic burden to Sri Lanka in 2015, with indirect costs (66% of total) exceeding the direct costs (44%).

Addressing alcohol use and its harms through effective implementation of evidence-based polices and interventions such as establishment of a taxation method that will continuously reduce affordability, strengthening enforcement of the current restrictions on advertising and promotions, enhancing the capacity and the priority given by the enforcement agencies to implement driving under the influence of alcohol counter measures and education of the public on different issues related to alcohol consumption is urgently required to address this economic burden,” wrote the researchers already in 2018.

Ranaweera S, Amarasinghe H, Chandraratne N, Thavorncharoensap M, Ranasinghe T, Karunaratna S, et al. (2018) Economic costs of alcohol use in Sri Lanka. PLoS ONE 13(6): e0198640.

Alcohol costs remain vastly under-estimated in Sri Lanka

Despite the high alcohol burden cited in this study, Sri Lanka’s alcohol costs remain vastly under-estimated for several reasons:

  • The U.S. Centers for Disease Control and Prevention (CDC) identify 54 different acute and chronic conditions that alcohol causes. The study however surveyed the costs of only 29 of these conditions, due to a lack of data.
  • The study ignored several indirect costs of alcohol due to the lack of data.
    • These include the opportunity cost of the money spent on alcohol, the cost of disease prevention and screening, the out-of-pocket expenses of patients that seek treatment from the private sector, transport costs borne by patients, law enforcement and judicial costs, and the costs of property damage and insurance.
  • Of the indirect costs that were considered, estimates only considered costs of income based on a 70-year age limit. In practical terms, many people in Sri Lanka continue working well beyond this age.
  • The economic cost of presenteeism.
  • The intangible costs of alcohol, such as the costs of pain, grief, and suffering because of the loss of loved ones. Studies estimate that the intangible costs of alcohol may account for up to 20% to 27% of the total cost.
  • The costs of alcohol-related violence and suicide.

Therefore, Sri Lanka’s alcohol burden is likely even higher than studies might suggest.

Increased alcohol tax revenue reduces alcohol consumption and boosts economic recovery

Speaking at the policy dialogue, IPS Research Economist Ms Priyanka Jayawardena presented evidence of the individual and domestic burden of alcohol.

In Sri Lanka, it is estimated that a household spends 10% of their monthly budget on alcohol.

This spending on alcohol then gives rise to expenses due to health conditions, injuries, and other problems – a vicious cycle.

Alcohol taxation places the greater burden of the tax proportionate to the level of alcohol consumption, not income. As the affordability of alcohol falls, so does alcohol consumption and harm.

Crowding out of healthy spending due to alcohol expenditures
On average, a household in Sri Lanka spends 10% of their monthly budget on alcohol.

RESET Alcohol Initiative facilitates high-impact action to prevent and reduce alcohol harm

The RESET Alcohol Initiative is supported by a $15 million philanthropic award.

RESET Alcohol is a collaboration of six global organizations: Vital Strategies, which is leading the initiative, Movendi International, Johns Hopkins University, Global Alcohol Policy AllianceNCD Alliance; and World Health Organization (WHO). RESET Alcohol is currently working in seven countries primarily in Latin America, Africa, and South-East Asia. Public health efforts to protect more people from alcohol harm are vastly underfunded relative to the burden alcohol causes, and the philanthropic award that funds RESET Alcohol roughly doubles existing global funding. 

RESET Alcohol is an initiative that brings together national governments, civil society, research organizations, and global leaders in public health and alcohol policy to develop and implement evidence-based alcohol policies from the World Health Organization’s WHO) SAFER technical package.

Why alcohol taxation matters

Movendi International provides two Special Features on alcohol taxation and more than 550 resource articles about alcohol taxation.

The WHO Global Alcohol Strategy recommends that Member States establish a system for specific domestic taxation that takes into account the alcohol content of the beverage, accompanied by an effective enforcement system. It also encourages countries to review prices regularly in relation to inflation and income levels; ban or restrict sales below cost and other price promotions; and establish minimum prices for alcohol where applicable.

Alcohol taxation is the single most cost-effective alcohol policy solution. It helps reduce overall alcohol use and related harm, as well as heavy and high-risk alcohol use. For instance, young people and adult alcohol users engaging in heavy episodic alcohol use are exposed to serious health and social risks, as reflected in statistics on highway safety, injuries, violent crime, or domestic violence, according to the World Bank.

Secondly, there is good evidence that alcohol harm occurs in a social context, and that alcohol users across the spectrum of different amounts and patterns of alcohol intake influence one another.

This means that reducing alcohol affordability, through ensuring price increases by raising taxes, is effective in reducing the overall level of alcohol consumed in a society, including the consumption of the heaviest alcohol users. Alcohol taxation is proven to reduce heavy and high-risk alcohol use. That’s why it is so effective in preventing and reducing alcohol harm.

The accumulated research findings indicate that population-based policy options – such as the use of alcohol excise taxation to reduce alcohol affordability, reducing alcohol availability and implementing bans on alcohol advertising – are the “best buys”.

Pro-poor, pro-productivity and pro-sustainable development

A World Bank study illustrated that tobacco and alcohol taxes benefit especially lower income households. With increasing alcohol and tobacco taxes and declining alcohol use, better health ensues, less money is needed for smoking-and alcohol related healthcare services and injuries, and labor productivity improves due to reduced sickness and absenteeism.

The World Bank experts found:

This situation as observed in different countries across the world counters the traditional finding that tobacco and alcohol tax increases, by themselves, are regressive – leading to the largest percentage reductions in pre-tax incomes for the lowest-income households.

But the picture changes markedly when the benefits of reduced mortality and morbidity are included. These benefits are strongly progressive, for two reasons.”

Lesotho: Estimated Revenue Impact of Proposed Tobacco and Alcohol Levy, Final Report, World Bank Group Team, January 25, 2017, Executive Summary

Alcohol and tobacco taxation are progressive in two aspects:

  1. Alcohol harm, for instance, disproportionately affects households and communities with lower socio-economic status. That is why these vulnerable people and communities benefit enormously from declining alcohol use and related harm.
  2. Improvements of health, employment, and social outcomes are relatively more important to lower-income households because they are more vulnerable to the consequences of alcohol harm due to their lack of resources.

Triple win potential of alcohol taxes

Public health-oriented taxes on tobacco and alcohol are non-distortionary taxes. They have a triple benefit:

  1. Raise fiscal revenue,
  2. Reduce and prevent harm due to tobacco and alcohol, and
  3. Promote health and development by easing the health system burden and facilitating investments into healthcare and health promotion.

Besides revenue raising objectives, the rationale for excise taxes on alcohol is to reflect their harmful external costs. The benefits of higher alcohol taxes are obvious for individuals and entire communities. The benefits result from:

  • Reduced alcohol use,
  • Preventing the initiation of alcohol use among children and youth, as well as
  • Reducing the negative health, social, and economic consequences caused by the products and practices of the alcohol industry.

Source Website: Biz English