Lithuania’s 2017 Tax Policy Offers a Clear Case for Alcohol Prevention
A new landmark study by the Centre for Addiction and Mental Health (CAMH) confirms that Lithuania’s 2017 alcohol excise tax increase delivered both economic gains and significant health improvements. The findings offer compelling lessons for countries where alcohol harms poses a major burden on people and society.
One of the clearest global examples of an alcohol policy that delivers both improved health and compelling economic returns.”
Dr. Jürgen Rehm, the Centre for Addiction and Mental Health
Published in the journal Addiction and co-led by Dr. Jürgen Rehm of CAMH and Dr. Mindaugas Štelemėkas of the Lithuanian University of Health Sciences, the study presents compelling evidence that raising alcohol taxes boosts population health and national economies.
A High Return on Public Investment
Lithuania’s tax policy raised alcohol excise taxes by 112% for beer, 111% for wine, and 23% for spirits. This led to retail price increases of 26% for beer, 7% for wine, and 6% for spirits.
This increase of the alcohol tax and price made alcohol products less affordable and impressive benefits:
- The policy generated over €100 million in new tax revenue within one year, a 20% increase.
- At the same time, Lithuania saw lower rates of premature death caused by alcohol, saving approximately €35.3 million in productivity losses.
- Healthcare costs dropped by another €3.8 million.
Importantly, it cost the government only €320,000 to implement the policy.
According to CAMH, for every €1 invested in implementing these taxes, the country gained €420 in economic returns.
Clear Public Health Improvements
The alcohol excise tax increase also delivered measurable health benefits. According to the CAMH study, Lithuania experienced fewer alcohol-related hospitalisations and a decline in overall mortality. The study also noted a narrowing of health inequities between high- and low-income populations.
Importantly, there was no evidence of increased illegal alcohol consumption.
Supporting Evidence from Movendi International
Independent sources confirm the positive impact of alcohol taxation in Lithuania. For instance, in 2023, the World Health Organization published a groundbreaking report that showed alcohol-related deaths in the country fell by 22% between 2016 and 2018 as result of the alcohol excise tax increase. In the same period, government revenue from alcohol taxes rose by 38%.
A separate case study highlights that the 2017 tax will likely prevent new cancer cases and cancer deaths.
Moreover, in 2022, Lithuania’s per capita alcohol excise tax revenue reached €188, a 49.3% increase from 2010 in real terms.
These figures confirm that raising alcohol taxes reduces harm and boosts public finances.
Implications for Other Countries
Many countries continue to see rising alcohol-related harms, yet alcoholic products remain cheap and are even becoming more affordable.
The Lithuanian success story demonstrates that increasing alcohol taxes is a powerful tool for health promotion, social justice, and economic growth.
As Dr. Rehm stated via CAMH, this is one of the clearest global examples of an alcohol policy that delivers both improved health and compelling economic returns.
This is one of the clearest examples globally where an alcohol policy intervention not only improved health, but also made strong economic sense. Governments seeking to improve societal health while strengthening their economies should seriously consider following Lithuania’s lead.”
Dr. Jürgen Rehm, Centre for Addiction and Mental Health
The findings support evidence-based evidence-based alcohol policy action that prioritises health promotion. Raising alcohol excise taxes is not just good fiscal policy. It is a critical step toward protecting people’s health and preventing future harm caused by the products and practices of alcohol companies.