The Effectiveness of an Alternative Alcohol Taxation Method in a Middle-Income County: A Case Study of Thailand

Abstract

Background: While specific taxation has been found to be effective in reducing alcohol consumption and its related harms in High-Income Countries, it theoretically encourages drinking initiation in Low- and Middle-Income Countries (LMIC) with a high prevalence of lifetime abstainers. This dissertation aims to systematically review the existing evidence of the effects of taxation in LMIC on alcohol consumption, alcohol-related harms, and the rate of drinker initiation, and to examine how changes in Thailand’s Two Chosen One (2C1) taxation rates affect alcohol consumption, related harms and drinking initiation. Method: (1) A systematic review and meta-analysis that examines the effects of taxation policy on alcohol consumption, alcohol-related harms and the rate of drinker initiation in LMIC. (2) A quasi-experimental study using interrupted time-series analysis that examines the effects of alcohol taxation increases in Thailand on alcohol consumption and traffic fatalities. (3) An analysis of four consecutive national surveys on alcohol consumption behaviours to examine the effect of alcohol tax increases on drinking initiation prevalence in Thailand.Result: There were only 10 published studies that quantitatively examined the effect of alcohol taxation policy on consumption in LMIC. In LMIC the price elasticity of demand was -0.64 for all alcohol consumption, -0.50 for beer consumption, and -0.79 for consumption of other alcohol. No studies were found that examined the effects of taxation policy on alcohol-related harms and drinking initiation in LMIC. Thailand’s alcohol taxation increase in 2009 was associated with a reduction in alcohol consumption (tax elasticity of -1.95) and in traffic fatalities (tax elasticity of -1.90). Increased taxation prevented drinking initiation among young people 15 – 24 years of age during 2001-2011 in Thailand (tax elasticity of -0.40). Conclusion: Increases in taxation under the 2C1 taxation method were associated with decreases in alcohol consumption, alcohol-related harms and drinking initiation.