Raising tax by just 15 cents a standard drink would reduce alcohol sales, road deaths and save an estimated $240 million in social harms caused by drunk driving, according to a Kiwi study.

The economic modelling study was carried out by public health researchers at the University of Otago, Wellington with Health Research Council Funding and has just been published in the international journal Injury Prevention.

 “Currently, around four out of five adults drink alcohol and around one in five of all drinkers consume hazardous quantities of alcohol. Road traffic crashes attributable to alcohol are primarily associated with this high-risk hazardous binge drinking behaviour, said one of the researchers Professor Nick Wilson.

The researchers modelled the effect on Kiwi drinking rates of a one-off  15c increase in the current excise tax per standard drink (10 g of pure alcohol) to bring New Zealand’s average alcohol tax rates in line with the UK and Australia.

They estimated it would result in a 4.3 per cent reduction in alcohol purchased which in turn would reduce the number of drunk-driving related deaths by 110 and cut the cost of treating crash victims by $3.6m. On the other hand they built into their calculations that averting road transport deaths and injuries may increase the health cost burden of disease like cardiovascular disease but overall these spin-off effects were outweighed by the reduced impact of the road accidents and an overall improvement in quality of life.

Lead author of the study, Dr Linda Cobiac, added that the health cost impacts were dwarfed by an estimated NZ$240 million reduction in costs of other social harms including costs of lost output due to temporary disability, legal and court proceedings and vehicle damage.

Cobiac said the model also focused on crash injury reduction benefits so the overall cost savings were likely to be much greater if reductions in other alcohol-related problems (such as cancer, liver disease, violence and child neglect) were included in the analysis.

The researchers says bringing alcohol taxes into line with the UK and Australia would see the equivalent of 1.5 million litres of pure alcohol not being consumed and an increase in alcohol excise tax income of $370 million.

The public health research follows the recent Tax Working Group interim report which found the current alcohol tax system unnecessarily complex and recommended it be reviewed. The working group urged the government to seek input from public health experts to assess the health effects of alcohol consumption and the impact of alcohol abuse.

“Ultimately a smart government would want to use the proven power of the tax lever to minimise harm from products like alcohol and tobacco – while lowering taxes on good things that society wants more of such as paid work,” said Wilson.


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