Alcohol abuse, hardly a new problem among Europeans, is increasingly becoming a topic of public debate. The average European consumption of alcohol per capita (among those aged 15 or older) is 12.5 in liters of pure alcohol. Polish alcohol consumption, while higher than average, is in line with many former Soviet countries – and lower than Portugal – but significantly higher than the Italians, Macedonians, or the Dutch.
Government policy had one effect: Beer sales overtook spirits in the late 1990s, a change commonly attributed to the fact that beer is the only alcoholic beverage that may be legally publicized (although under significant restrictions). Beer is now the most popular form of alcohol in Poland, accounting for 55 percent of all alcohol consumption. But total alcohol consumption has remained static, even risen, with the switch to the lower alcohol content beer displacing spirits.
Nonetheless, alcoholism remains a problem in Poland, as it is elsewhere in Europe. According to the World Health Organization, the rate of “hazardous drinking” in Central and Eastern Europe (2.9) and Nordic countries (2.8) is nearly three-times that of Southern Europe (1.1). And the amount of alcohol Poles are drinking is increasing by the year.
Clearly, the bishops are right to sound an alarm about this worsening problem. But, when it comes to economics and public policy, we must diligently ask whether they have considered all the potential impacts of their proposals.
The problem with the “sin tax”
Bishop Bronakowski’s pastoral letter outlines what it perceives as the “responsibility” of state and local authorities. “The great responsibility of the state is not only to make wise and precise law but also effective and ruthless enforcement,” he wrote. “You must completely ban the advertising of alcohol and limit its physical and economic availability.” That echoes a report from the Polish Parliament’s Bureau of Analysis on “Alcohol in Poland,” which says, “One of the main factors that influence the amount of consumption of alcohol is its accessibility, both economical and physical.”
The idea that state price controls and state monopoly over liquor sales may help reduce alcohol consumption is quite common across the old continent. “Political action like minimum pricing and reducing access to alcohol needs to be taken now” across Europe “to prevent many future casualties,” said Markus Peck, chairman of the department of gastroenterology and hepatology, endocrinology, and nephrology at the Klinikum Klagenfurt Hospital in Austria.
The impetus for action is clear and commendable. However, the specific call for state action ignores several key facts about “sin taxes.”
Although we all agree with Bishop Bronakowski that alcohol abuse is a severe problem, both in Poland and in the rest of Europe, the governmental and economic actions that he proposes may cause even deeper problems. “The consequences of the sin tax are often the very opposite of those intended by its designers,” as Fr. Robert Sirico has written. The correlation between regulations on selling alcoholic beverages and consumption of alcohol in different European countries is disputed. Finland is moving toward liberalization of its alcohol market. On the other hand, Italy despite its relatively light regulation of alcohol, has one of the lowest rates of alcohol consumption in Europe.
As with any policy, there are unintended consequences to a sin tax. Scandinavian countries impose strong limits on alcohol sales, including a state monopoly and controlled (read: artificially higher) prices. Sweden and Finland, as a result, have to face the problem of considerable smuggling from other countries within the Schengen Area. The state-run stores, which hold a monopoly on alcohol sales, keep short working hours in order to limit consumption. Instead, this encourages consumers to stock up, often buying more alcohol than they had intended. Having the extra alcohol on the premises itself may encourage binge drinking.
Poland, which borders seven different countries including three non-EU states, is especially susceptible to smuggled contraband. Lower prices have already created a large smuggling operation of illegal cigarettes into Poland. Higher prices on alcohol will almost certainly increase alcohol smuggling. In addition to the criminal element, the quality of the smuggled alcohol may present health issues of its own.