Taxation is a well-recognized policy tool in preventing alcohol harm. In 2023, Sri Lanka increased alcohol taxation rates in order to increase government revenue and reduce costs due to alcohol harm. In 2024, the Alcohol and Drug Information Center (ADIC) of Sri Lanka carried out a survey to investigate the impact of the policy change on alcohol consumption and harm.
ADIC carried out this survey during the Sinhala and Tamil New Year celebrations in 2024, the period when alcohol consumption is typically the highest in the country.
The survey used a sample size of 415 individuals from across all nine provinces. 46.2% of the participants were female and 53.7% were male.
According to the survey results, 64% of the participants stated that they saw a clear decrease in alcohol consumption during celebrations in 2024.
Only 26% believed that there was no change in the alcohol consumption in the country. 10% stated that they witnessed an increase in alcohol consumption during the festive period in 2024.
Lower affordability reduces alcohol consumption, prevents alcohol harm
The survey also asked the respondents what they believed to be the reasons behind the decrease in alcohol consumption. Of the multiple possible options provided, a clear majority – 71.5% – thought that increased alcohol prices were the reason.
Others selected from options such as opposition of family members (29.0%), health issues (22.9%), growing perception of alcohol as devoid of purpose (15.9%), reduced availability, (12.1%) and reduced income (2.3%) as their response.
The decrease in second-hand alcohol harm is also an important indicator of reduced alcohol consumption. A majority of the survey participants – 70.8% – perceived a significant decrease in alcohol-related conflicts and quarrels in their communities. On the other hand, 21.4% saw no marked change, and 7.8% even thought that there was an increase in such incidents.
The National Authority on Tobacco and Alcohol Act (NATA) prohibits the promotion of alcohol of any kind in the country. However, it is difficult to regulate social media advertising and promotion, which the alcohol industry exploits. One component of the opinion survey focused on investigating the prevalence of alcohol advertising during the festive period. According to the responses, 71.4% of survey participants reported encountering alcohol promotion on social media platforms.
Alcohol tax increase improves government revenue, reduces healthcare costs and increases public welfare
Analysis of the Sri Lanka’s excise tax revenue indicates that the alcohol tax increases succeeded in improving government revenue.
In 2022, the government earned 169.49 billion rupees in excise tax. This increased to 180.1 billion rupees in 2023.
According to the Excise Department’s records, alcohol excise duty income in particular saw an increase of 7% during the same period.
Considering the economic challenges that the country is facing at present, this is an important boost to government income.
The reduction of alcohol consumption through tax rate increases therefore goes hand-in-hand with increased government revenue.
On the other hand, reduced conflict and other alcohol-related social harms further reduces the governments public welfare burden.
ADIC stresses that the government sustains a rational price increase of alcohol in order to ensure that these benefits do not diminish over time. There is also a clear need to prevent violations of the country’s alcohol policy to ensure that the alcohol industry cannot increase its own profits at the expense of the Sri Lankan people.
The Executive Director of ADIC, Sampath De Seram elaborated on the survey findings further:
The Sinhala and Tamil New Year season is when Sri Lanka experiences the most alcohol harm, and alcohol companies earn the most profits. This is why ADIC decided that we needed to investigate how the recent tax increases impacted alcohol harm during the season.
We found that there had been a remarkable impact on alcohol harm through tax increases. The change is significant enough that communities throughout the country have observed it.
The alcohol taxes have reduced alcohol affordability and alcohol consumption, which has in turn reduced wider alcohol harms. Local media reports also verify that according to hospital data, the number of road accidents during the festive period decreased dramatically. Driving under the influence of alcohol is a key driver of road accidents in the country.
The government also benefitted from a 7% increase in excise revenue, which will ultimately result in improved public welfare for the people.
ADIC will continue its campaign for a comprehensive tax system for alcohol.”
Sampath De Seram, Executive Director, Alcohol and Drug Information Center, Sri Lanka
Vast public support for tax-based alcohol policies in Sri Lanka
In 2023, research carried out by ADIC in partnership with Vital Strategies under the RESET Alcohol Initiative revealed the extent of the population’s support for alcohol taxation. Movendi International summarized the survey findings:
- An overwhelming 97% of the adults participating in the survey stated that alcohol consumption is a problem in the country.
- 79% of survey respondents even believe that it is a major problem in the country.
- 61% of respondents said that alcohol consumption was a problem in the country despite being consumers themselves.
- 75% of survey respondents believe that alcohol taxation is an effective way of reducing alcohol consumption in Sri Lanka.
- It is clear therefore that Sri Lankan society is welcoming of further alcohol policy change.
Earlier in 2024, Movendi International reported that Sri Lankan experts called for alcohol policy improvements in the country. These experts used the ‘Policy Dialogue on Alcohol Control for a Healthier Sri Lanka’ event organized by the Institute of Policy Studies (IPS) to express their ideas.
IPS held the event as part of the RESET Alcohol Initiative. In calling for change experts made special reference to a 2015 research that calculated the cost of alcohol harm to Sri Lankan society.
This research found that in 2015, the alcohol industry cost the country $885.86 Million. This is equivalent to 1.07% of Sri Lanka’s GDP for the year.
Movendi International provides two Special Features and more than 550 resource articles about alcohol taxation.