MoH looking into Alcohol Tax to control alcohol consumption

The Ministry of Health has come up with a draft concept paper that is looking at the issue of taxing alcohol to reduce the usage or abuse of alcohol.

The concept paper, which was worked on by the Health Minister Lyonpo Dechen Wangmo herself, is a first and important step to compile a detailed evidence based report that will aim to show how taxation could be an effective curb on high alcohol consumption.

The Bhutan based report, with international data and examples, could become the main evidence that can be used to convince the Ministry of Finance and finally the Cabinet to come up with fiscal measures to control alcohol abuse.

Lyonpo Dechen Wangmo said, “The study will look at how alcohol is taxed globally and also at reducing access or availability. It will look at if higher taxes serve as a deterrent and what are the current practices and improvements.”

She said that the taxes are the mandate of the Ministry of Finance and she hopes that the study will provide evidence on how taxation deters alcohol consumption and ultimately the decision on taxes will be up to the MoF and finally the Cabinet.

The Prime Minister Lyonchhen (Dr) Lotay Tshering said, “If there is evidence or case studies that proves that alcohol consumption can be reduced by making it more expensive, then I will definitely support it.”

The Prime Minister said that as of now he is neutral on the issue and will wait to see what the final reports says.

The DNT’s in its extensive Health section of its manifesto tackles the issues of Non-Communicable Diseases (NCDs).

It says, “We are aware of the rising epidemic of non-communicable and lifestyle diseases and its threats on the sustainability of our health system. Breathing life into the adage, of prevention being better than cure, we will invest in prevention programs.”

One of the prevention programs is to review and strengthen tobacco and alcohol policies.

The Health Minister said that alcohol is a multifaceted issue and so it cannot just be looked at by the Health Ministry.

The minister said that for some alcohol tax is just a part of a bigger issue of NCDs as there is also the practice of taxing junk foods, trans-fat oils etc. to reduce its consumption.

As per the 2018 Annual Health Bulletin, Alcohol liver disease is the leading cause of deaths in Bhutan.

However, the total number of deaths related to alcohol has decreased from190 in 2016 to 166 in 2017 and the incidence of alcohol liver diseases per 10,000 population decreased from 46 in 2016 to 35 in 2017.

The National Council in the recent Parliament session presented an interim report on the harmful use of alcohol. 514 people died due to alcohol liver disease from 2015-2017.

The report said that there are still around 4,118 bars in the country and that various regulations around alcohol like not selling it before 1 pm and after 10 pm is not followed.

It found that from September 2016 to 2018 there were 6,529 traffic offences related to drunk driving.

The Ministry of Economic Affairs, as part of a larger national policy, called National Policy and Strategic Framework to Reduce Harmful Use of Alcohol (2015-2020) to curb alcohol usage came up with or strengthened some old measures.

One is that grocery shops cannot sell alcohol for drinking within the same premises and there will have to be a separate bar.

Another is the continuation of the suspension of giving out bar licenses. The Ministry has also been very strict in cancelling bar licenses that do not renew on time.

However, an issue is the illegal sale of alcohol on premises that do not have bar licenses, including in remote and rural areas.

In 2010 the National Statistics Bureau (NSB) published a Monograph or report titled ‘Alcohol Use and Abuse in Bhutan.’

It said that alcohol abuse results in numerous social and economic problems, which may cause great harm in Bhutan, given the easy accessibility, affordability of alcoholic beverages, and wide acceptability of alcohol consumption among the Bhutanese people.

It pointed to party bingeing on alcohol by young people during the weekends which can be seen as a new-pattern drinking that can result in health risks and bigger social problems.

Although, commercial alcoholic beverages are commonly available in the country, the local specialty home-brews (ara, bangchang, singchang and tongba) constitute the most popular drinks among the Bhutanese population.

The study interestingly challenges the popular notion that Bhutan’s adult per capita consumption in 2010, derived using the commercial drinks, came to 8.47 litres which is much higher than the global per capita consumption of pure alcohol in 2002 at 6.2 litres.

The NSB study assumes this is an overestimate. Using beer as a proxy measure, the per capita consumption came to 3.06 litres of pure alcohol, according to the study. Beer was used because of its lesser propensity to be exported through border towns by way of informal channels. The combined pure alcohol per capita consumption of bangchang and ara was 0.86 litres (unrecorded alcohol consumed).

This estimate is close to the WHO’s (Global Status Report on Alcohol, 2004) with estimates of 0.62 litres (1997), 0.57 litres (2001) and 0.70 litres (2002) in Bhutan.

The report said that like any other commodity, the consumption of the liquor products is shown to have been sensitive to their prices as against the popular theory that alcohol is not an ordinary commodity and is not price sensitive.

It said there was a clear inverse relationship between price and consumption. The more expensive premium brands sold less, whereas the cheap brands sold more in the domestic market.

Conversely the study also said that the ways alcohol consumers respond to, and compensate for price change, are complex. This, it said, occurs when there is a possibility for substitution.

“The likelihood of consumers substituting taxed-alcoholic beverages with traditional homebrews is high, as homebrews are untaxed, naturally cheaper and constitute the most consumed alcoholic beverages in the country,” said the report.

The report said that the literature review on alcohol control policies in both developed and developing countries show that alcohol related problems are complex issues that require multi-level coordinated policies and actions.

If the aim of the Health Ministry is to look at international case examples and studies of the impact on taxation on alcohol consumption, then there is a mountain of international studies, papers and evidence that shows a direct correlation between higher alcohol taxes and lower consumption.

However, like the 2010 NSB study pointed out, the Health Ministry will have to factor in if higher alcohol taxes will simply make people switch to cheaper alternatives like local home brews and if a more comprehensive approach is needed.

The main headache for the government though will be political -given the widespread use of alcohol in Bhutan and its cultural connotations and acceptance.

The sensitivity of the issue can already been seen in the reluctance of the MoH to share its concept note report.