Impacts of excise tax raise on illegal and total alcohol consumption: A Thai experience

Abstract

Aim: In 2007, the Thai government raised the excise taxes of brandy, blended spirits and white spirits to reduce alcohol consumption. The study objectives were to explore the consumption of illegal white spirits, and estimate the price response on total alcohol consumption at the national level, after 2007 taxation policy.

Methods: Consumption behaviour of illegal white spirits was surveyed 6 months after the taxation policy in two rural communities, with and without traditional production of white spirits. The quantity of total alcohol consumption was estimated for a year after taxation using baseline consumption based on the third National Health Examination Survey, market prices surveyed by the Bureau of Trade and Economic Indices and price elasticities for the demand.

Findings: After raising the alcohol taxes, the spirits prices increased within 2 months. From the community survey, illegal white spirits consumption was prevalent only in the community with a production. At the national level, estimated increase in this consumption was very small. Estimated total alcohol consumption slightly decreased when taking into account substitution effects among beverages.

Conclusion: The impact on illegal white spirits consumption is not a significant issue. Raising the taxes of the distilled spirits together with their taxed substitutes should be considered for future policy option.