Needed: An effective Liquor Policy

The Moving finger by Lionel Wijesiri

Long-standing relationship between humans and alcoholic beverages has always been a complex phenomenon. Take Sri Lanka, for example: Despite numerous attempts for controlling consumption, alcohol products seem to gain increasing popularity among people from all walks of life.

Total alcohol consumption in Sri Lanka has increased over the past decade from 37 million litres to 56 million litres. A survey has revealed that amongst fathers, almost 50% were noted to drink; a higher number was noted rurally, over 50%.

So whether we like it or not, alcohol consumption has become a fact of life in Sri Lanka.

If so, what can be done to mitigate its negative impacts? Is more stringent regulation or higher taxation by the Government necessary?

These are some of the questions of primary concerns to all of us who are concerned about this pathetic plight.

Although alcohol is still one of our major social issues and health and economic costs climbing unacceptably high, the sad part is that it still lacks salience as an important government issue.

The Treasury concept at all times was that 'alcohol taxation is a dog's breakfast'.

Public health considerations do not at present influence our alcohol taxation policy even though such a policy the prevention intervention best supported by evidence of effectiveness.

It is in this context that we should view the comments made by Suresh Shah, CEO of Ceylon Brewery at an interview to LMD magazine recently. According to him in UK the soft alcohol consumption accounts to 97 per cent of the market while hard alcohol is only 3 per cent.

In the US too, the proportion to soft to hard liquor is 95 to 5.

But strangely in Sri Lanka, the scene changes topsy-turvy. Here the soft liquor amounts to 6 per cent and legitimate hard alcohol is 30 per cent and illicit alcohol or Kassippu adds up to staggering 64 per cent.

Price

It is no doubt that within the range of factors that determine how people use alcohol, price is an important influence, both on total alcohol consumption and individual drinking patterns.

The effect of price changes on alcohol consumption has been extensively investigated.

Some critics have proven that the drinkers are not very sensitive to price, and that this undermines the ability to use taxes to influence their drinking behaviour. Evidence and experience suggests that only limited inroads on the problems associated with excessive drinking can be expected from a policy of high alcohol taxes.

I believe that the Sri Lankan policy on alcohol taxation has created a mass of anomalies and is a wholly counter-productive tax regime.

The system is becoming more and more discredited as:

* Consumers look to buy illicit alcohol, which are available plentifully:

* High duties have encouraged a massive boom in illicit liquor brewing;

* Taken together, this has led to a considerable shortfall in revenue for the Exchequer.

In my opinion, alcohol taxes are an inappropriate way of addressing the social costs of alcohol abuse.

Alcohol taxes, on a per drink basis, have the disadvantage of burdening both abusers and non-abusers. Other approaches to alcohol control can be focused more on abusers.

Clear policy

There is no reason to impose the same tax on drinkers, who consume soft alcohol moderately and who cause no harm. In fact, studies show that moderate consumption of beverage alcohol is beneficial to one's health.

Mr. Shah adds his opinion : " If you take taxation policy in more developed countries, you will find that taxation per litre reflects roughly the alcohol content in the product. For instance, in London, if whiskey is sold at 10 pounds, beer is sold at about a pound.

This reflects the 5 per cent of pure alcohol content in beer against the 42 per cent in whiskey. Ideally, if arrack is Rs. 250.00, beer should not be more than Rs.30.00. This is the type of price comparison that needs to be driven at.

Talking about illicit liquor, he says: "Knowingly poor people are being pushed into this disastrous situation, the Government Liquor Policy should be structured in a way that would not lead people to consume what is harmful. Liquor Policy, which is a combination of taxation, distribution and communication, must reflect this thinking".

Mr. Shah takes distribution as an example. He says that in developed countries there is a distinction between the distribution of soft and hard liquor.

Generally, soft liquor is available everywhere whereas hard liquor availability is restricted. However in Sri Lanka, he says there are 2200 licensed outlets every nook and corner selling hard and soft liquor both.

Food for thought!