January 15, 2021 (New York) – Harmful use of alcohol is a leading cause of death and disability globally, contributing to 3 million deaths each year as well as other social ills. Data suggests that the COVID-19 pandemic may be pushing these harms to new heights, with increased rates of alcohol sales and consumption.
A new report by global health organization Vital Strategies unveils that governments are subsidizing these harms, with economic policies that trade short-term economic incentives for the alcohol industry for long-term harms and economic damage. The Sobering Truth: Incentivizing Alcohol Death and Disability documents the billions of dollars that governments and development agencies give to corporations that produce, market and sell alcohol, who in turn actively dissuade impactful regulation to reduce the harm of their products.
“Most people don’t realize that taxpayer money is fueling the alcohol industry which in turn creates a triple burden for countries—lost revenue, increased alcohol consumption, and overwhelmed public health systems, particularly in low- and middle-income countries with lower health protections and higher alcohol-attributable deaths,” said report co-director, Nandita Murukutla, Vice President of Global Policy and Research.
Data on incentives to the alcohol industry are generally fragmented and hard to obtain. The report is the first of its kind to present a comprehensive view of publicly available data and information on the types and amounts of economic incentives going to the alcohol industry over the last 25 years with a compilation of illustrative examples.
Incentives given to the alcohol industry are often justified as economic benefits, to advance
economic development, create jobs, or produce much-needed tax revenue. Economists call an economic tool “perverse” when the result goes against the fundamental interests of the payer—in the case of this report, governments. These perverse incentives to the alcohol industry exert an unnecessary cost on societies. In South Africa for example, the cost of alcohol harm is calculated to be as much as 12 percent of the GDP.
“Development assistance is meant to improve economic development and welfare – not cause death,” said Rebecca Perl, Vice President of Partnerships & Initiatives at Vital Strategies who co-directed the report. “While incentives to the alcohol industry are often justified as economic benefits to the countries, the data shows incentives end up placing an even greater burden on health systems. If governments really want to encourage sustainable development, this is a foolhardy way to go about it.”
Alcohol use is linked to noncommunicable disease including cancers and can also exacerbate infectious diseases including COVID-19. It affects a range of social and economic factors, including lost productivity, road injury and death, crime and violence in the form of homicides, suicides, and domestic abuse. According to the World Health Organization, alcohol contributes to the death of one person every 10 seconds.
“The report shows that even as countries struggle to meet their health care needs, including the soaring costs of noncommunicable diseases like cancer and heart disease, that many of them continue to promote the very products (alcohol, unhealthy foods, and tobacco) that harm people’s health by causing such diseases. They’re also fueling a growing economic and social burden that strain health systems, harm people, and exert an unnecessary cost on societies,” added Murukutla.
Key findings include:
- Governments and international development agencies give a range of significant incentives to the alcohol industry such as development assistance, tax breaks, marketing deductions, tax rebates and production subsidies, as well as incentives in the form of international trade agreement practices.
In 2017, the top ten alcohol producers were exempted from paying taxes on $1.5 billion spent on beer advertising alone in the U.S.
- Most incentives offered by governments to the alcohol industry flow as development assistance from governments in higher-income countries (European Union, United Kingdom, and United States) to low- and middle-income countries (Africa, Central and Eastern Europe, and the Caribbean) that have the highest attributable deaths to alcohol.
Over the past 30 years, about US $422 million of development assistance has been invested by the European Bank for Reconstruction and Development in breweries in Central and Eastern Europe, a region with high rates of harmful drinking.
- Incentives to the alcohol industry are often justified as economic benefits to the recipient countries. In reality, alcohol does not contribute to the welfare of the societies that receive this development aid but rather costs those societies in the long run in terms of health care costs and lost productivity.
SABMiller leveraged a state-sponsored subsidy of a new seed variety of sorghum in Uganda to spur local-production of a low-cost beer. While adding revenue for smallholder farmers and 100 jobs, the cost outweighs the benefit. Uganda has the seventh highest rate of harmful alcohol use in Africa and alcohol use is the leading risk factor for premature death.
- Too many governments have not responded to the alcohol epidemic and have been slow to adopt evidence-based strategies that reduce harmful alcohol consumption such as tax increases, controlling the availability and sale of alcohol, and regulating advertising and marketing.
“So many more lives are harmed than are helped with these incentives to the alcohol industry,” said Murukutla. “This report is just the tip of the iceberg. We need more transparency. Governments and the development community need to reexamine their current economic incentives to the alcohol industry, assess the impacts of its investments in an industry that contributes to productivity loss and ill health and advocate for policies that promote health and that avoid costs down the line.”
The report provides the following recommendations to governments and aid agencies for a sustainable development agenda:
- Monitor and report investments made to the alcohol industry using robust data collection.
- Calculate the health cost of incentives provided to the alcohol industry.
- Use available finances and fiscal policies to strengthen health systems.
- Phase out incentives that can be harmful to health.
- Track the adaptation of alcohol industry behavior and corporate actions during and after crises and shocks like COVID-19.
- Avoid alcohol industry interference. Governments and development agencies should steer clear of the conflict of interest that arises with alcohol industry engagement.
To read the full report, visit: vitalstrategies.org/TheSoberingTruth
Media Contacts:
Christina Honeysett, Vital Strategies: choneysett@vitalstrategies.org; +1.914.424.3356
Ally Davis, Vital Strategies: adavis@vitalstrategies.org; +1.516.205.4203
About Vital Strategies
Vital Strategies is a global health organization that believes every person should be protected by a strong public health system. We work with governments and civil society in 73 countries to design and implement evidence-based strategies that tackle their most pressing public health problems. Our goal is to see governments adopt promising interventions at scale as rapidly as possible.
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