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Minimum Pricing of Alcohol versus Volumetric Taxation: Which Policy Will Reduce Heavy Consumption without Adversely Affecting Light and Moderate Consumers?

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  • Anurag Sharma
  • Brian Vandenberg
  • Bruce Hollingsworth

Abstract

Background: We estimate the effect on light, moderate and heavy consumers of alcohol from implementing a minimum unit price for alcohol (MUP) compared with a uniform volumetric tax. Methods: We analyse scanner data from a panel survey of demographically representative households (n = 885) collected over a one-year period (24 Jan 2010–22 Jan 2011) in the state of Victoria, Australia, which includes detailed records of each household's off-trade alcohol purchasing. Findings: The heaviest consumers (3% of the sample) currently purchase 20% of the total litres of alcohol (LALs), are more likely to purchase cask wine and full strength beer, and pay significantly less on average per standard drink compared to the lightest consumers (A$1.31 [95% CI 1.20–1.41] compared to $2.21 [95% CI 2.10–2.31]). Applying a MUP of A$1 per standard drink has a greater effect on reducing the mean annual volume of alcohol purchased by the heaviest consumers of wine (15.78 LALs [95% CI 14.86–16.69]) and beer (1.85 LALs [95% CI 1.64–2.05]) compared to a uniform volumetric tax (9.56 LALs [95% CI 9.10–10.01] and 0.49 LALs [95% CI 0.46–0.41], respectively). A MUP results in smaller increases in the annual cost for the heaviest consumers of wine ($393.60 [95% CI 374.19–413.00]) and beer ($108.26 [95% CI 94.76–121.75]), compared to a uniform volumetric tax ($552.46 [95% CI 530.55–574.36] and $163.92 [95% CI 152.79–175.03], respectively). Both a MUP and uniform volumetric tax have little effect on changing the annual cost of wine and beer for light and moderate consumers, and likewise little effect upon their purchasing. Conclusions: While both a MUP and a uniform volumetric tax have potential to reduce heavy consumption of wine and beer without adversely affecting light and moderate consumers, a MUP offers the potential to achieve greater reductions in heavy consumption at a lower overall annual cost to consumers.

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  • Anurag Sharma & Brian Vandenberg & Bruce Hollingsworth, 2014. "Minimum Pricing of Alcohol versus Volumetric Taxation: Which Policy Will Reduce Heavy Consumption without Adversely Affecting Light and Moderate Consumers?," PLOS ONE, Public Library of Science, vol. 9(1), pages 1-13, January.
    • Handle: RePEc:plo:pone00:0080936
    DOI: 10.1371/journal.pone.0080936
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    Cited by:

    1. Marco Caliendo & Juliane Hennecke, 2022. "Drinking is different! Examining the role of locus of control for alcohol consumption," Empirical Economics, Springer, vol. 63(5), pages 2785-2815, November.
    2. Anurag Sharma & Brian Vandenberg, 2019. "Heterogenous wealth effects of minimum unit price on purchase of alcohol: Evidence using scanner data," PLOS ONE, Public Library of Science, vol. 14(12), pages 1-16, December.
    3. Calcott, Paul, 2019. "Minimum unit prices for alcohol," Journal of Health Economics, Elsevier, vol. 66(C), pages 18-26.
    4. Irena Palamani Xhurxhi, 2020. "The early impact of Scotland's minimum unit pricing policy on alcohol prices and sales," Health Economics, John Wiley & Sons, Ltd., vol. 29(12), pages 1637-1656, December.

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