Failure to raise alcohol taxes increases consumption: Fact Sheet

Colombo, May 4 (Daily Mirror) - A recent Alcohol and Drug Information Centre (ADIC) fact sheet has highlighted the growing economic and social consequences of not consistently increasing alcohol taxes over the past two years, pointing to rising consumption levels and mounting pressure on Sri Lanka’s healthcare system.

According to the data, a 20 percent increase in alcohol taxes in 2023 led to a notable decline in alcohol sales by 8.3 million absolute liters compared to 2022. Government revenue from alcohol taxation also rose by Rs. 11.6 billion during that period.

A further 20 percent tax increase at the beginning of 2024 — following consecutive hikes of 14 percent and 6 percent — resulted in an additional drop in alcohol sales by 430,000 absolute liters. Meanwhile, government revenue increased further by Rs. 42.15 billion.
Despite these gains, the report notes that the overall health and economic costs associated with alcohol consumption far exceed the revenue generated. In 2022, such costs were estimated at Rs. 237 billion, compared to Rs. 165.2 billion in alcohol-related income, placing a significant burden on the national healthcare system and the wider economy.

The fact sheet also reveals a concerning trend in production levels. Beer production increased by 5 percent in 2025, reaching 0.77 million liters, while hard liquor production rose by 17 percent to 3.35 million liters — indicating a rise in consumption.

Experts attribute this trend to the lack of adjustments in alcohol taxation in line with inflation and income growth since early 2024. As alcohol becomes more affordable over time, consumption increases, undermining public health objectives.

The report highlighted that taxation and pricing policies, as recommended by the World Health Organization (WHO), remain among the most effective and cost-efficient measures to control alcohol consumption. Higher and regularly adjusted taxes can reduce affordability, curb excessive use, and generate revenue to offset associated social and health costs.

Key recommendations include increasing excise taxes in line with inflation, strengthening public awareness on the harms of alcohol, and restricting price promotions and marketing practices that encourage consumption.

The report also highlights the broader health impact, noting that non-communicable diseases (NCDs) account for 83 percent of all deaths in Sri Lanka. Alcohol use alone is responsible for approximately 50 deaths per day, totaling around 20,000 deaths annually.

The findings underscore the urgent need for consistent and evidence-based alcohol taxation policies to balance revenue generation with public health protection.